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Question 1 of 10
1. Question
Which of the following statements is correct in relation to New York Stock Exchange requirements in monthly filing of reports?
Correct
Under the SEA Rule 17a-5, if the reports are to be made monthly, members must file Part II of Form X-17A-5 while member organizations are required to file the first part. If reports are to be made quarterly, both members and member organizations must file the first and the second part of Form X-17A-5.
Incorrect
Under the SEA Rule 17a-5, if the reports are to be made monthly, members must file Part II of Form X-17A-5 while member organizations are required to file the first part. If reports are to be made quarterly, both members and member organizations must file the first and the second part of Form X-17A-5.
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Question 2 of 10
2. Question
Which of the following changes must apply the retroactive application?
I. Changes in measurement basis
II. Changes and corrections of amounts such as the fair value
III. All changes in accounting policies
IV. All changes in accounting estimatesCorrect
Under the SEA Rule 17a-5, the retroactive application of changes must not be restated. Some examples of changes that need retroactive application are changes in measurement basis and all changes in accounting policies. On the other hand, changes and corrections of amounts and changes in accounting estimates must be applied prospectively rather than retrospectively.
Incorrect
Under the SEA Rule 17a-5, the retroactive application of changes must not be restated. Some examples of changes that need retroactive application are changes in measurement basis and all changes in accounting policies. On the other hand, changes and corrections of amounts and changes in accounting estimates must be applied prospectively rather than retrospectively.
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Question 3 of 10
3. Question
What causes the market risk, or the possibility of experiencing losses which affect the financial markets of an entity?
I. Changes in interest rates
II. Natural disasters
III. Large price movements
IV. Terrorist attacksCorrect
Market risk is affected by changes in interest rates, natural disasters, terrorist attacks, and many other market-related factors. Unusual large price movement is a factor in liquidity risk rather than the market risk. Both liquidity and market risk incur losses with different factors.
Incorrect
Market risk is affected by changes in interest rates, natural disasters, terrorist attacks, and many other market-related factors. Unusual large price movement is a factor in liquidity risk rather than the market risk. Both liquidity and market risk incur losses with different factors.
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Question 4 of 10
4. Question
Which of the following statements relate to ownership of collateral under the net capital requirements of SEA Rule 15c3-1?
Correct
Under the SEA Rule 15c3-1, collateral must be an allowable asset to secure a non-allowable asset in conformity with the net capital rule. Also, the collateralized securities must be in the nominee, bearer, or firm’s name to have value for net capital purposes. It may also be named under a custodian provided all requirements have been submitted with the securities.
Incorrect
Under the SEA Rule 15c3-1, collateral must be an allowable asset to secure a non-allowable asset in conformity with the net capital rule. Also, the collateralized securities must be in the nominee, bearer, or firm’s name to have value for net capital purposes. It may also be named under a custodian provided all requirements have been submitted with the securities.
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Question 5 of 10
5. Question
Which of the following statements is correct concerning contingent liabilities?
Correct
In a company’s financial statements, contingent liabilities are not recognized but it needs disclosures. It may not be disclosed if there is only a remote possibility of payment. Contingent liabilities are arising from events that have not yet occurred.
Incorrect
In a company’s financial statements, contingent liabilities are not recognized but it needs disclosures. It may not be disclosed if there is only a remote possibility of payment. Contingent liabilities are arising from events that have not yet occurred.
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Question 6 of 10
6. Question
Which of the following transactions are within the definition of “aggregate indebtedness”?
I. Money payable against securities loaned and securities “failed to receive”
II. Customers’ and non-customers’ free credit balances
III. Margins securities borrowed from non-customers
IV. The market value of margin securities borrowed from customersCorrect
The money payable against securities loaned, securities “failed to receive”, and free credit balances of customers and non-customers are included in the definition of aggregate indebtedness. The market value of securities borrowed “with no equivalent value paid or credited” is also included, but not the margin securities borrowed from non-customers and the market value of securities borrowed from customers.
Incorrect
The money payable against securities loaned, securities “failed to receive”, and free credit balances of customers and non-customers are included in the definition of aggregate indebtedness. The market value of securities borrowed “with no equivalent value paid or credited” is also included, but not the margin securities borrowed from non-customers and the market value of securities borrowed from customers.
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Question 7 of 10
7. Question
Which of the following statements is correct regarding the aggregate indebtedness in SEA Rule 15c3-1?
Correct
Under the SEA Rule 15c3-1, guaranteed accounts are generally included in aggregate indebtedness while accrued interest payables to subordinated lenders are excluded. Other items included in the aggregate indebtedness are the future commodities of non-customers and their credit balances.
Incorrect
Under the SEA Rule 15c3-1, guaranteed accounts are generally included in aggregate indebtedness while accrued interest payables to subordinated lenders are excluded. Other items included in the aggregate indebtedness are the future commodities of non-customers and their credit balances.
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Question 8 of 10
8. Question
Which of the following liabilities collateralized need not be included in aggregate indebtedness?
I. Securities borrowed from other broker-dealers obtained by pledging proprietary securities
II. Securities pledged by other broker-dealers upon the lending of proprietary securities
III. Securities pledged from other broker-dealers obtained by pledging proprietary securities
IV. Securities borrowed by other broker-dealers upon the lending of proprietary securitiesCorrect
With securities pledged against securities borrowed, securities “borrowed” from other broker-dealers obtained by pledging securities and securities “pledged” by other broker-dealers upon the lending of proprietary securities are not included in aggregate indebtedness. Deferred income are also excluded such as the unearned plan fees that will not be refunded.
Incorrect
With securities pledged against securities borrowed, securities “borrowed” from other broker-dealers obtained by pledging securities and securities “pledged” by other broker-dealers upon the lending of proprietary securities are not included in aggregate indebtedness. Deferred income are also excluded such as the unearned plan fees that will not be refunded.
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Question 9 of 10
9. Question
Which of the following may not be allowed for a specialist to be engaged with corresponding to SEA Rule 15c3-1?
Correct
According to SEA Rule 15c3-1, a specialist may be engaged with hedging transactions and transactions directly related to specialist securities. However, he may not be engaged with non-specialist related securities transactions, except for occasional investment transactions. Excess funds in a reverse repurchase agreement must not be considered as transactions made on an occasional basis.
Incorrect
According to SEA Rule 15c3-1, a specialist may be engaged with hedging transactions and transactions directly related to specialist securities. However, he may not be engaged with non-specialist related securities transactions, except for occasional investment transactions. Excess funds in a reverse repurchase agreement must not be considered as transactions made on an occasional basis.
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Question 10 of 10
10. Question
Where must the joint securities account with a spouse of a sole proprietor broker-dealer be reported?
Correct
For joint securities account with a spouse of sole proprietor broker-dealer, it shall be reported on the Focus Balance Sheet. It must be indicated if the broker-dealer affected more than ten transactions in one calendar year as stated on the SEA Rule 15c3-1.
Incorrect
For joint securities account with a spouse of sole proprietor broker-dealer, it shall be reported on the Focus Balance Sheet. It must be indicated if the broker-dealer affected more than ten transactions in one calendar year as stated on the SEA Rule 15c3-1.