Which term refers to client-owned securities that are fully paid for and cannot be used for business?

Which term refers to client-owned securities that are fully paid for and cannot be used for business?

• A. Liquid Assets
• B. Collateral Securities
• C. Segregated Securities
• D. Restricted Securities

Answer: (C)

The term that refers to client-owned securities that are fully paid for and cannot be used for business is "Segregated Securities." This classification indicates that these securities are held in a separate account or are set aside specifically for the client's ownership, ensuring that they are not commingled with other assets or used by the firm for its operational purposes. Segregation underscores the protection of client assets and reinforces the fiduciary responsibility of the dealer representation to prioritize the client's holdings.

On the other hand, liquid assets are resources that can quickly be converted into cash, collateral securities are often pledged against loans or obligations, and restricted securities typically refer to ownership interests that come with some form of limitation on transferability. These distinctions help clarify the unique nature of segregated securities within the broader context of financial asset classification.