Series 28 Example Questions
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A carrying firm has just validated an account transfer. The carrying firm should now do all of the following EXCEPT:
A ) Freeze the account, cancelling all open orders and taking no new orders in the account
B ) Complete the transfer
C ) Determine whether to take exception to the transfer
D ) 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
Answer: The Best Answer is C
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.
The most FINRA may fine a member for committing a minor rules violation, if the member submits a minor rule violation plan letter, is:
A ) $5,000
B ) $1,000
C ) $2,500
D ) $7,500
Answer: The Best Answer is C
Feedback: Minor Rule violations are violations that FINRA views as minor, and therefore not subject to heavy sanctions. If the National Adjudicatory Council accepts the respondent’s letter, the respondent will be fined an amount not to exceed $2,500. Respondents can be either member firms or associated persons. Once the letter is accepted, the matter will be deemed final, and FINRA will report the violation to the SEC. Minor rules violations are not required to be disclosed on Form BD or Form U4, and they do not appear on brokercheck.
AJ Brokers recently acquired RD Co. AJ Brokers is looking to calculate its net capital to make sure it is in compliance with the SEC's net capital requirements. Which of the following would not be considered a nonallowable asset?
A ) AJ Brokers' customer debit balances
B ) AJ Brokers' patent for a new trading technology
C ) AJ Brokers' real estate holdings
D ) The excess value paid for the acquisition of RD Co. over the fair market value of its assets
Answer: The Correct Answer is A
Feedback: 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.