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Correct Answer: D

It is unethical to borrow money or securities from a client, unless the client is a broker-dealer, a bank or other financial institution in the business of loaning money, or an affiliated person of the adviser. Owing money or securities to a client is not only unethical, it could also influence advice rendered to a client, creating a potential conflict of interest. Even when the client is an immediate family member, borrowing must not take place unless it meets one of the conditions state above. How do we know the family member does not meet one of those conditions? We know because nothing in the question indicates such and, on the exam, if such is the case, it will be clearly spelled out.