SIE (Securities Industry Essentials) Practice Exam

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What is the most basic tenet of suitability determination?

Know your product rule
Know your customer rule
Know your limits rule
Know your broker rule

The correct answer is: Know your customer rule

The most basic tenet of suitability determination is the "Know your customer" rule. This means that before recommending a financial product to a client, a broker must have a comprehensive understanding of the client's financial situation, investment objectives, risk tolerance, and other relevant factors. This ensures that the recommendation is appropriate for the individual client, and takes into account their specific needs and circumstances. The other options listed are incorrect because they do not address the importance of understanding the client's profile in making suitable recommendations. Option A, the "Know your product" rule, focuses solely on the features and characteristics of the product itself. Option C, the "Know your limits" rule, does not pertain to suitability determination, and Option D, the "Know your broker" rule, is not a commonly recognized tenet in this context.