Exercise
Answer true or false
- 1. True or false. The SEC adopted the customer protection rule to ensure customer funds and securities are kept separate the firm’s operations.
- 2. True or false. Securities do not physically need to be located at a broker-dealer to be considered “possessed.”
- 3. True or false. A hypothecation agreement gives a broker-dealer the right to use customers’ securities as collateral to finance its own investing activities.
- 4. True or false. The PAB account was initiated to protect against losses arising from the failure of a member firm with large numbers of broker-dealer customers.
- 5. True or false. The reserve formula calculation must be done monthly.
- 6. True or false. The customer protection rule says that all securities in its customers’ margin accounts must be kept in either the broker-dealer’s possession or control.
- 7. True or false. If debits exceed credits in the reserve calculation, the