Answer: The Best Answer is C

Rationale: In general, Net Capital = Tentative Net Capital - Haircuts. Haircuts are the difference between the market value of a security and the security's value as collateral for a loan. Tentative net capital reflects the total liquid assets of a firm before haircuts are withdrawn from security values.

Answer: The Best Answer is A

Rationale: Once the account transfer is validated, the carrying firm: • Will send a copy of the transfer instructions and a list of the client’s securities positions and money balances, and the values of the assets in the account. • Will freeze the account, cancelling all open orders and taking no new orders in the account. • Has three additional business days to complete the transfer. Completing the transaction includes figuring out if there are any securities that still haven’t been delivered or received, and valuing the securities at the fair market value. The carrying firm should have determined whether to take exception to the transfer before validating the transfer.

Answer: The Best Answer is C

Rationale: When a selling member fails to deliver securities that are paid for on the settlement date, the selling member may implement a buy-in as early as the third business day after settlement. A buy-in is when the buying member closes out the position. The buying member must send a notice of the buy-in to the selling member by 12:00 noon, Eastern Time, at least two business days prior to the buy-in. After receiving the buy-in notice, the seller can respond that securities are in transit or with the transfer agent. If this occurs, the selling member is given 7 additional calendar days before the close out can occur. Any loss to the buying member due to the buy-in will be borne by the selling member.

Answer: The Best Answer is C

Rationale: Real estate and intangible assets, including patents and goodwill, are nonallowable assets, so they will not be included in the calculation of net capital. These assets are considered nonallowable because they are not liquid assets. Net capital is a measure of liquid assets in excess of liabilities. Goodwill is the difference between what was actually paid for a company in an acquisition and the fair market value of the assets of the acquired company.