Final answer:
The statement is false; bank trust departments are not limited to investments in marketable securities but must follow the prudent investor rule and consider a range of suitable investment options. The correct option is B.
Step-by-step explanation:
It is false that bank trust departments acting in a fiduciary capacity may only purchase investments that are marketable securities actively traded in recognized markets such as the New York Stock Exchange and NASDAQ. While it's common for fiduciaries to invest in marketable securities due to their liquidity and lower risk compared with non-marketable assets, they are not restricted to only these types of investments.
Fiduciaries must adhere to the prudent investor rule, which allows them to invest in a broad range of asset classes as long as the investment decisions are made with care, skill, prudence, and diligence considering the purposes, terms, distribution requirements, and other circumstances of the trust.
Furthermore, the role of financial intermediaries, like banks, is broader than just providing marketable securities. They also offer various accounts and coordinate supply and demand in the financial capital market. As part of their fiduciary duty, banks must ensure the suitability and appropriateness of investments for their trust accounts, which can extend beyond publicly traded stocks and bonds.
Legislative frameworks such as the Federal Securities Act and the establishment of the Securities and Exchange Commission provide regulatory oversight, promoting the integrity of capital markets and protecting investors, but do not confine bank trust departments to exclusively deal with marketable securities.