Series 63 practice questionmediumBroker-Dealer Registration — Financial Requirements
The Administrator may require a broker-dealer to maintain a minimum net capital. This requirement is designed to:
- AEnsure the broker-dealer can pay dividends to shareholders
- BLimit the number of transactions the broker-dealer can process
- CProtect customers by ensuring the firm has sufficient financial resources to meet its obligations✓ Correct answer
- DPrevent the broker-dealer from expanding to other states
Explanation
Why C — Protect customers by ensuring the firm has sufficient financial resources to meet its obligations
Under USA Section 202(d), the Administrator may set minimum financial requirements, including net capital requirements, for broker-dealers. The purpose is investor protection, ensuring the firm has adequate financial resources to meet obligations to customers and to operate in a financially sound manner.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,051+ Series 63 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Regulation of Broker-Dealers & Agents questions
- An agent recommends and sells a private real estate investment to a client without the knowledge or approval of his…
- A client of a registered agent in State Q gives verbal permission to buy 500 shares of a specific stock. The agent…
- An agent wishes to share in the profits of a client’s account. To do so legally under the USA, what is required?
- An agent in State Z executes frequent trades in a client’s account that are not consistent with the client’s investment…
- A registered agent assures a client they will not lose money on a recommended investment. Under the USA, this statement…
- Which of the following is NOT considered a prohibited practice for agents under the USA?
- Which of the following actions is LEAST likely to be considered prohibited under the USA?
- An agent tells a client that he will reimburse any losses in their account. Under the USA, this is: