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

Under the aggregate indebtedness standard of SEC Rule 15c3-1, broker-dealers must maintain net capital of at least 1/15 of their aggregate indebtedness.

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

SEC Rule 15c3-3 requires broker-dealers to maintain possession or control of customer fully paid and excess margin securities to protect customers.

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

Haircuts are percentage deductions applied to securities positions to account for potential market risk when computing net capital.

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

When net capital falls below the minimum, the firm must immediately cease business operations and provide notice to its designated examining authority.

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

FINRA Rule 4110 requires advance written notice to FINRA before any capital withdrawal that would reduce the firm's net capital by more than 30% within a 35-calendar-day period.

Series 24 – General Securities Principal Exam Practice Test

Series 24 – General Securities Principal Exam Practice Test

Series 24 – General Securities Principal Exam Financial & Capital Requirements