Series 24: Review Quiz

Review Quiz

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. Dealers are firms that effect more than ten transactions in a calendar year for their own investment accounts or write over-the-counter (OTC) options. The minimum capital requirement for a dealer is:
7. A. $50,000
8. B. $100,000
9. C. $200,000
10. D. $500,000
11. 3. Net capital may best be described as:
12. A. the excess of a firm’s liabilities over liquid assets
13. B. the excess of a firm’s current liabilities over net worth
14. C. the excess of a firm’s liquid assets over non-liquid assets
15. D. the excess of a firm’s liquid assets over all liabilities
16. 4. The ratio of aggregate indebtedness to net capital of an established firm cannot be greater than:
17. A. 1:1
18. B. 10:1
19. C. 12:1
20. D. 15:1
21. 5. Under the SEC Net Capital Rule, what is the haircut for a member firm’s inventory of 500 shares of ABCD Corporation at $50 per share?
22. A. $25,000
23. B. $3,750
24. C. $10,000
25. D. $2,500
26. 6. A subordination agreement is an investment in:
27. A. a state or local government
28. B. a broker-dealer
29. C. a limited partnership
30. D. a limited liability company
31. 7. The Exchange Act requires subordination agreements to be filed with the SEC:
32. A. 5 days prior to the effective date
33. B. 7 days prior to the effective date
34. C. 10 days prior to the effective date
35. D. no later than the effective date
36. 8. In order to use customers’ free credit balances in its business operations, the firm must send a written notification to customers which:
37. A. affirms that their free credit balances are segregated
38. B. states the amount of money the firm owes the account