Series 24 - Unit 6 - Financial
Responsibility & Recordkeeping
Minimum net capital for CARRYING firms... - correct answer ✔the > of
$250,000 or 6 2/3% of AI
Minimum net capital for INTRODUCING firms.. - correct answer ✔- $5,000,
or
- $50,000 if receives customer securities OR participates, as a selling group
member, in a firm commitment underwriting.
If an introducing firm ($5,000 or $50,000) endorses OTC options or effects
more than 10 trades/year in its investment account, it is considered a
DEALER and it's minimum net capital is... - correct answer ✔$100,000
Minimum net capital for members that deal solely in mutual fund shares, unit
trusts or variable annuities is either $___ (sells on subscription basis only) or
$___ (accepts wire orders from customers. - correct answer ✔- $5,000
- $25,000
Market makers; minimum net capital is a function of the number of markets
made subject to a $100,000 minimum and a maximum of $1 million. For each
stock in which the firm makes a market, the requirements are...
- bid price of $5 or less , $___ in net capital per security,
- bid price of > $5, ___ in net capital per security. - correct answer ✔- $1,000
per security,
- $2,500 per security
,Minimum net capital requirement for firms engaged solely in M&A work or in
the sale of limited partnerships is...
Min. net capital for prime brokers is...
Min. net capital for block positioning is... - correct answer ✔- $5,000
- $1.5 million
- $1 million
Haircuts...
- actively traded common stock...
- stock w/limited trading market (only 1 or 2 independent market makers)
- limited trading market stock with 3 or more independent market makers...
- stocks with no ready market or your firm is the only market maker...
- undue concentration (security exceeds 10% of tentative net capital)...
- fail to deliver stocks; 5th business day after settlement, position is marked to
market and a ___% haircut is taken on its current market value - correct
answer ✔- 15% haircut
- 40% haircut
- 15% haircut
- 100% haircut
- 15% of net capital for any stock that exceeds 10% of net capital (term
'tentative net capital' will be tip-off phrase)
- 15% haircut
Alternative net capital method; for firms that elect to compute net capital under
the alternative standard, minimum net capital is $____ or ___% of debits,
whichever is greater. - correct answer ✔$250,000 or 2% of debits
AI:NC ratios...
, - Established firm:
- First year firm:
On exam, an alternative way of seeing the 15:1 AI:NC ratio for a
CLEARING/CARRYING firm is the GREATER of $250,000 or 6 2/3% of AI. -
correct answer ✔- Max is 15:1 (established firm)
- Max is 8:1 (first year firm)
Temporary subordinated loans...
- no more than ___ in a 12-month period,
- max duration of such loans is ____ - correct answer ✔- 3 in a 12 month
period,
- max 45 days
Repayment of a subordinated loan agreement at maturity is suspended it,
after repayment, its AI:NC ratio exceeds ___:1 or if its net capital is less than
120% of its minimum requirement.
Prepayment is permitted as long as the agreement has been in force for at
least one year and the payment will not cause its AI:NC ratio to exceed ___:1
- correct answer ✔- 12:1
- 10:1
FOCUS Reports filing requirements...
- FOCUS II filed _____
- FOCUS IIA filed ____
within 17 business days after month or quarter end.
If a firm terminates its membership in any national securities exchange, it
must file a FOCUS II or IIA within ___ business days. - correct answer ✔- II
filed monthly
- IIA filed quarterly
Responsibility & Recordkeeping
Minimum net capital for CARRYING firms... - correct answer ✔the > of
$250,000 or 6 2/3% of AI
Minimum net capital for INTRODUCING firms.. - correct answer ✔- $5,000,
or
- $50,000 if receives customer securities OR participates, as a selling group
member, in a firm commitment underwriting.
If an introducing firm ($5,000 or $50,000) endorses OTC options or effects
more than 10 trades/year in its investment account, it is considered a
DEALER and it's minimum net capital is... - correct answer ✔$100,000
Minimum net capital for members that deal solely in mutual fund shares, unit
trusts or variable annuities is either $___ (sells on subscription basis only) or
$___ (accepts wire orders from customers. - correct answer ✔- $5,000
- $25,000
Market makers; minimum net capital is a function of the number of markets
made subject to a $100,000 minimum and a maximum of $1 million. For each
stock in which the firm makes a market, the requirements are...
- bid price of $5 or less , $___ in net capital per security,
- bid price of > $5, ___ in net capital per security. - correct answer ✔- $1,000
per security,
- $2,500 per security
,Minimum net capital requirement for firms engaged solely in M&A work or in
the sale of limited partnerships is...
Min. net capital for prime brokers is...
Min. net capital for block positioning is... - correct answer ✔- $5,000
- $1.5 million
- $1 million
Haircuts...
- actively traded common stock...
- stock w/limited trading market (only 1 or 2 independent market makers)
- limited trading market stock with 3 or more independent market makers...
- stocks with no ready market or your firm is the only market maker...
- undue concentration (security exceeds 10% of tentative net capital)...
- fail to deliver stocks; 5th business day after settlement, position is marked to
market and a ___% haircut is taken on its current market value - correct
answer ✔- 15% haircut
- 40% haircut
- 15% haircut
- 100% haircut
- 15% of net capital for any stock that exceeds 10% of net capital (term
'tentative net capital' will be tip-off phrase)
- 15% haircut
Alternative net capital method; for firms that elect to compute net capital under
the alternative standard, minimum net capital is $____ or ___% of debits,
whichever is greater. - correct answer ✔$250,000 or 2% of debits
AI:NC ratios...
, - Established firm:
- First year firm:
On exam, an alternative way of seeing the 15:1 AI:NC ratio for a
CLEARING/CARRYING firm is the GREATER of $250,000 or 6 2/3% of AI. -
correct answer ✔- Max is 15:1 (established firm)
- Max is 8:1 (first year firm)
Temporary subordinated loans...
- no more than ___ in a 12-month period,
- max duration of such loans is ____ - correct answer ✔- 3 in a 12 month
period,
- max 45 days
Repayment of a subordinated loan agreement at maturity is suspended it,
after repayment, its AI:NC ratio exceeds ___:1 or if its net capital is less than
120% of its minimum requirement.
Prepayment is permitted as long as the agreement has been in force for at
least one year and the payment will not cause its AI:NC ratio to exceed ___:1
- correct answer ✔- 12:1
- 10:1
FOCUS Reports filing requirements...
- FOCUS II filed _____
- FOCUS IIA filed ____
within 17 business days after month or quarter end.
If a firm terminates its membership in any national securities exchange, it
must file a FOCUS II or IIA within ___ business days. - correct answer ✔- II
filed monthly
- IIA filed quarterly
