Series 27: Chapter 1 Practice Questions

Chapter 1 Practice Questions

1. 1. The minimum net capital requirement for a broker-dealer that carries customer accounts and holds securities for its customers is:
2. A. $50,000
3. B. $100,000
4. C. $250,000
5. D. $500,000
6. 2. What is the minimum net capital requirement for a broker or dealer that carries accounts but does not hold customer funds or securities?
7. A. $10,000
8. B. $50,000
9. C. $100,000
10. D. $250,000
11. 3. The aggregate indebtedness standard requires that no broker or dealer may permit its aggregate indebtedness to all other persons to exceed what percent of its net capital?
12. A. 100%
13. B. 150%
14. C. 1,000%
15. D. 1,500%
16. 4. A broker or dealer with respect to the purchase, sale, and redemption of redeemable shares of registered investment companies must maintain net capital of:
17. A. $30,000
18. B. $10,000
19. C. $20,000
20. D. $25,000
21. 5. XYZ Brokerage has a net capital requirement of $60,000. XYZ needs to purchase a fidelity bond. What is the minimum amount of coverage it can purchase under FINRA rules?
22. A. $60,000
23. B. $72,000
24. C. $100,000
25. D. $0
26. 6. Which of the following are considered an allowable asset when calculating net capital?
27. A. Real estate
28. B. Goodwill
29. C. Furniture and fixtures
30. D. Securities holdings
31. 7. What is the haircut percentage for a municipal bond with a five-year maturity?
32. A. 4%
33. B. 5%
34. C. 6%
35. D. Same as a municipal of any other maturity
36. 8. DEF Brokers has tentative net capital equal to $18 million. The common stock it carries across its customer accounts consists of $20 million in long positions and $5 million short. Assuming this is its entire securities portfolio, what is the company’s net capital?
37. A. $16 million
38. B. $15 million
39. C. $16.5 million
40. D. $13.5 million
41. 9. The ratio of aggregate indebtedness to net capital of an established firm cannot be greater than:
42. A. 1:1
43. B. 10:1
44. C. 12:1
45. D. 15:1
46. 10. The ratio