Series 24 – General Securities Principal Exam Financial & Capital Requirements

Question 1

Under SEC Rule 15c3-1, what is the minimum net capital requirement for a broker-dealer operating under the aggregate indebtedness standard?

Accepted Answer

Net capital must equal at least 1/15 of aggregate indebtedness

Answer

Net capital must equal at least 1/10 of aggregate indebtedness

Answer

Net capital must be at least $250,000

Answer

Net capital must exceed total customer credits

Question 2

The SEC's Customer Protection Rule (Rule 15c3-3) primarily requires broker-dealers to:

Accepted Answer

Maintain possession or control of customer fully paid securities

Answer

File quarterly financial reports with FINRA

Answer

Hold customer assets in money market funds only

Answer

Segregate proprietary and customer trading accounts

Question 3

What is the purpose of the 'haircut' applied to securities positions when calculating net capital?

Accepted Answer

To reduce the value of securities to reflect market risk

Answer

To account for broker-dealer commissions

Answer

To adjust for foreign exchange fluctuations

Answer

To subtract deferred tax liabilities

Question 4

A broker-dealer's net capital falls below the required minimum. What is the firm required to do immediately?

Accepted Answer

Cease conducting a securities business and notify its DEA

Answer

File a Form BD amendment

Answer

Increase customer margin requirements

Answer

Liquidate all proprietary positions

Question 5

Under FINRA Rule 4110, when must a member firm provide FINRA with advance written notice before making a capital withdrawal?

Accepted Answer

When the withdrawal would reduce net capital by more than 30% in 35 days

Answer

When the withdrawal exceeds $1,000

Answer

When the firm has been in business less than one year

Answer

When the withdrawal is for compensation purposes

Question 6

Which of the following is classified as an 'allowable asset' in a broker-dealer's net capital computation?

Accepted Answer

Cash in a bank account

Answer

Furniture and fixtures

Answer

Prepaid expenses

Answer

Goodwill