Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

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If a security remains missing after 2 business days, when must the loss be reported?

1 business day
2 business days
The third day
5 business days

The correct answer is: The third day

In the context of securities transactions, the protocol for reporting a missing security is typically governed by established industry standards and regulatory guidelines. When a security is reported missing, it is essential for the affected party to take action promptly to protect against potential fraud or financial loss. The requirement to report the missing security after two business days is rooted in the need for timely communication and resolution. Specifically, if a security remains unaccounted for after two business days, the reporting must occur on the third business day. This allows for an appropriate timeframe to investigate the circumstances surrounding the missing security while ensuring that regulatory requirements are met. This approach serves to maintain the integrity of the market and protect the interests of all parties involved. Delaying the reporting beyond this timeframe could increase the risk of fraud or complicate the resolution process, which is why the industry emphasizes this three-day reporting window.