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A customer has $24,000 to invest in mutual fund shares. The registered representative advises the customer to invest $8,000 on ABCD fund; $8,000 in DEFF fund; and $8,000 in XYZZ fund; to give the customer complete diversification and reduce risk. These 3 funds all have different sponsors. This action is:________ A) appropriate for the customer B) a violation known as a breakpoint sale C) a violation known as spinning D) a violation known as interpositioning

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Answer:

A) Appropriate for the customer

Explanation:

By helping the customer divest his investment through placement in 3 different funds to reduce exposure in the event of failure is at best a conservative approach, which is the intrinsic nature of mutual funds. Low risk and fairly lucrative over time.