Final Exam 1

***A broker-dealer designated as a clearing firm would be expected to do all of the following except A) maintain a lower net capital than noncarrying broker-dealers. B) take custody of customer funds and securities. C) clear transactions for customer accounts. D) perform back-office functions such as sending trade confirmations to customers. - correct answersA) maintain a lower net capital than noncarrying broker-dealers. A firm carrying customer funds and securities assumes certain risks, and is therefore required to maintain levels of net capital higher than that of firms who do not accept custody of funds or securities (noncarrying firms). ***A common shareholder's preemptive right is the right to A) vote for board members when vacancies arise. B) any increase in share value between the time purchased and sold. C) share in earnings of the corporation via dividends when declared. D) maintain a proportionate share of ownership in the corporation. - correct answersD) maintain a proportionate share of ownership in the corporation. A shareholder's preemptive right is the right to maintain a proportionate share of ownership in the corporation. If a corporation wants to issue additional shares, existing shareholders have the right to purchase those shares in an amount that would keep their proportionate ownership in the corporation unchanged. ***A corporate retirement plan that defines the employee's income from the plan would be which of these? A) Defined benefit plan B) 401(k) plan C) Defined contribution plan D) Individual retirement plan - correct answersA