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1

Fail to receive and fail to deliver ledgers must be posted no later than:
a. The trade date
b. The settlement date
c. The day after the settlement date
d. Two days after the settlement date

D- The fail to receive ledger and the fail to deliver ledger are posted no later than two business days following the settlement date.

2

Which TWO of the following statements are CORRECT regarding maintenance of records required under Rule 17a-4?
I. In an omnibus account, records must be kept by the carrying member.
II. In an omnibus account, records must be kept by the introducing member.
III. In a fully-disclosed account, records must be kept by the carrying member.
IV. In a fully-disclosed account, records must be kept by the introducing member.
a. I and III
b. I and IV
c. II and III
d. II and IV

C- There are two types of clearing accounts that a nonclearing broker-dealer may maintain with a clearing broker-dealer. They are fully disclosed accounts and omnibus accounts.
In a fully disclosed account, the clearing broker-dealer will maintain all the records for the customer. The nonclearing firm will introduce the customer's account to the clearing firm, and the clearing firm will execute the orders, send the customer confirmations and statements, and take care of all the other required record keeping.
In an omnibus account, the nonclearing (introducing) firm will maintain all its own records. The clearing firm will only execute orders and clear them. All other details will be handled by the introducing firm.

3

The term customer under the net capital rule would include:
a. A municipal broker-dealer
b. General, special, or limited partners
c. Broker-dealers that maintain a special omnibus account
d. Subordinated lenders

C- Other broker-dealers are generally not viewed as customers for regulatory purposes; however, those maintaining a special omnibus account are considered customers.

4


All of the following information must be disclosed to a customer on a confirmation, EXCEPT:
a. The security traded, the price, and the number of shares
b. Whether the firm acted as principal or agent
c. The commission if the firm acted as an agent
d. Whether the order was solicited or unsolicited

D- The customer confirmation must disclose the date and time of the transaction (or the fact that the time of the transaction will be furnished upon written request to such customer), the identity, price, and number of shares or units of such security purchased or sold by such customer; and whether the broker or dealer is acting as agent for the customer, as agent for some other person, as agent for both the customer and some other person, or as principal for its own account. If the broker or dealer is acting as principal, it must disclose whether it is a market maker in the security. The fee must be disclosed if acting as agent, riskless principal, or principal for an NMS security. Whether the order was solicited or unsolicited would be on an order ticket, rather than a confirmation.

5


Which TWO of the following disclosure items would be included on an order ticket?
I. Whether the firm acted as principal or agent
II. Whether the order was solicited or unsolicited
III. The commission charged by the broker-dealer
IV. The designation DNR, if the customer does not want the order reduced when the stock trades ex-dividend
a. I and III
b. I and IV
c. II and III
d. II and IV

D- Whether the order was solicited or unsolicited and do-not-reduce instructions would be recorded on an order ticket. Whether the firm acted as principal or agent and the commission charged would be disclosed on a confirmation.

6

An agency order memorandum is prepared:
a. On the same day the order is received
b. Before the order is executed
c. At the time the order is received
d. At the time the trade blotter is posted

B- The agency order memorandum, or trade ticket, should be written prior to the execution of the order.

7

Total Common stock January 31 $1,050,000
Retained Earnings $840,000
Income: for February
Trading profits $275,000
Commissions $327,000
Margin Interest received $74,000
Expenses:
Employee compensation $264,000
Rent $20,000
Office supplies $12,000
Depreciation: equipment $6,000
Other relevant items: Subordinated loan $500,000 effective February 10

What is the ownership equity at the end of February?
a. $1,214,000
b. $1,424,000
c. $2,764,000
d. $2,264,000

D- At the end of February, the ownership equity of Ebenezer consisted of:
Common Stock $1,050,000
Retained Earnings $1,214,000

Total $2,264,000

8

Examples of items posted to subsidiary ledgers are:
I. Fails to deliver and fails to receive
II. Subordinated loans
III. Securities in transfer
IV. Long and short securities differences
a. IV only
b. I and III only
c. II and III only
d. I, III, and IV only

D- Fails to receive and fails to deliver, securities in transfer, long and short securities differences, and securities borrowed and loaned are examples of items posted to a subsidiary ledger. This ledger would provide the details of the specific transactions that caused the fails, or the specific securities that were borrowed and loaned. Entries should be posted to the subsidiary ledgers no later than two business days after they occur.

9

The trial balance of a broker-dealer contains the following information relative to customer accounts.
Customer Debit Balances:
Secured $720,000
Unsecured $72,000
Customer Credit Balances $126,000
When calculating the SEC Rule 15c3-3 reserve deposit, which TWO of the following statements are TRUE?
I. Total customer debits in the computation amount to $792,000.
II. The debits and credits will be shown as a single net number.
III. The debits and credits are shown individually and are not netted.
IV. The unsecured debits balances are not included in the computation.
a. I and II
b. II and IV
c. I and III
d. III and IV

D- Customer debits and credits are shown individually on each side of the trial balance and are shown in full, rather than as a single net item. Unsecured debits represent monies owed to the firm whereby there is no collateral available. An example might be customer purchases in a margin account for which a Federal Reg. T extension has been obtained.

10

Consider the following information for Kilbane Brokerage.
Cash $50,000
Inventory $200,000
Bank Loans $75,000
Stockholders' Equity $150,000
Which of the following entries would balance the financial statements of Kilbane?
a. Fail to deliver $75,000
b. Commissions $50,000
c. Fail to receive $25,000
d. Expenses $25,000

C- n the data presented, Kilbane has $250,000 in debits (cash and inventory) and $225,000 in credits (bank loans and Stockholders Equity). If $25,000 in fails to receive are added to the other credit items, the books will balance. If $25,000 in fails to receive are added to the other credit items, the books will balance.