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Correct Answer: street name
when an investor decides to purchase securities, such as stocks or bonds, they have a choice regarding the way in which these securities are registered. one common method is registering the securities in the "street name" rather than in the name of the actual investor who bought them. this means that the title of the securities is held under the broker's name, who acts as a custodian for the buyer.
registering securities in the "street name" has several advantages. firstly, it facilitates easier trading of the securities. since the securities are held electronically and already in the broker's system, transactions can be executed more swiftly without the need for physical transfer of certificates. this is particularly beneficial in active trading environments.
secondly, holding securities in the "street name" simplifies the process of record-keeping for the investor. the broker handles all administrative tasks associated with the securities, including ensuring compliance with legal and regulatory requirements, receiving dividend payments, and sending them to the investor, and managing communications from the issuing company.
additionally, using the "street name" registration provides an added layer of security. physical certificates, if lost or stolen, can be difficult and expensive to replace. electronic holding reduces this risk substantially.
it is important to note that even though the securities are registered in the broker's name, the investor retains full ownership rights. the investor is entitled to all dividends, capital gains, and voting rights associated with the securities. the broker is merely holding the securities in their name for administrative convenience.
in conclusion, registering securities in the "street name" is a common practice that offers several benefits in terms of convenience, speed of transactions, and security. it is a practical option for investors who do not wish to manage the physical aspects of their securities investments.
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