NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Operational Aspects of Investment Management
In the context of operational aspects of investment management, what is the primary role of a custodian for a client's securities portfolio?
A custodian safeguards the client's securities and handles settlement of trades, along with collecting income and corporate action benefits. It does not recommend investments, guarantee returns or determine brokerage, which makes safekeeping and settlement the correct description.
- ASafekeeping of securities and settlement of trades on behalf of the clientCorrect
- BRecommending which securities the client should buy
- CGuaranteeing a minimum return on the portfolio
- DSetting the brokerage rates charged by stock brokers
Explanation
A custodian holds securities in safekeeping and handles settlement, corporate action collection and related record keeping. It does not give investment advice, guarantee returns or fix brokerage rates, so those options describe functions it does not perform.
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