When a customer opens a non managed Fee Based Account which of the following would be true Quizlet

In the liquidation of a broker/dealer, after the SIPC trustee has distributed all specifically identifiable customer securities, a customer of the broker/dealer has $545,000 market value of fully paid securities being held in street name and $140,000 cash in an account. Which of the following statements regarding SIPC coverage for this customer would be correct?
[A] The customer would be covered for a maximum of $500,000 by SIPC and would become a general creditor of the broker/dealer for the remainder of his claim.
[B] The customer would be covered for $500,000 in securities and $140,000 cash for a total of $640,000.
[C] The customer would be covered for $140,000 cash only; the securities in street name are not covered under SIPC.
[D] The customer would be covered for either $140,000 or $500,000 securities at his discretion.

Which of the following best describes the limits of protection for customers of broker/dealers under SIPC?
[A] $500,000 in securities, $100,000 in cash per customer.
[B] $500,000 in securities and cash per customer, but no more than $250,000 in cash.
[C] $100,000 in securities and $100,000 in cash per customer.
[D] $100,000 in securities and $40,000 in cash per customer.

The best answer is C.
Prior to making the new purchase, the margin account held 100 shares of ABC at $10, fully paid, for equity of $1,000 in the account. There is $500 of SMA from this position that cannot be used currently, since minimum margin to open an account is $2,000 of equity or the account being "fully paid," whichever is less. Now the customer wishes to buy another $5,000 of stock, which would generate a Regulation T call of $2,500. Since there is $500 of SMA in the account, the customer need only deposit $2,000.

After all this, the account will show:

Long Market Value - Debit = Equity
$1,000 $1,000 Original Position
$5,000 $3,000 $2,000 New Position
$6,000 $3,000 $3,000

The best answer is B.
For every $1 increase in market value in a long margin account, the SMA goes up by $.50. If the market value rises to $200,000, the account will show:

Long Market Value - Debit = Equity % SMA
$200,000 $75,000 $125,000 63% $25,000
Against $200,000 of market value, 50% can be borrowed, or $100,000. Since the debit is $75,000, an additional $25,000 can be borrowed. This is the SMA.

The best answer is A.
Initially, the account sets up as:

Credits - Short Market Value = Equity %
Sale $50,000 $50,000 0
Margin $25,000 $25,000
Total $75,000 $50,000 $25,000 50%
If the market value rises to $55,000, the account will show:

Credits - Short Market Value = Equity %
$75,000 $55,000 $20,000 36%

Which of the following statements are TRUE regarding Transfer on Death (TOD) account registration?
I An elderly person who registers a security "TOD" maintains full control over the asset until death
II Upon death, the security is excluded from the estate of the decedent and avoids probate
III This registration is designed for the elderly, who, in the past, would register securities with an adult immediate family member as "Joint Tenants with Rights of Survivorship," exposing that elderly person to the whims of the immediate family member
IV This registration avoids estate tax upon death of the holder

A. I and II only
B. III and IV only
C. I, II, III
D. I, II, III, IV

The best answer is C.
Prior to making the new purchase, the margin account held 100 shares of ABC at $20, fully paid, for equity of $2,000 in the account. There is $1,000 of SMA from this position that cannot be used currently, since minimum margin to open an account is $2,000 of equity or the account being "fully paid," whichever is less. Now the customer wishes to buy another $6,000 of stock, which would generate a Regulation T call of $3,000. Since there is $1,000 of SMA in the account, the customer need only deposit $2,000. After all this, the account will show:

Long Market Value - Debit = Equity
$2,000 $2,000 Original Position
$6,000 $4,000 $2,000 New Position
$8,000

A brokerage firm offers the following 4 products to customers:

Flat commission rate of $100 per equity trade that includes the services of a dedicated representative

Flat commission rate of $10 per equity trade without a dedicated representative

$1,000 per year flat fee-based account that includes unlimited trading without a dedicated representative

$5,000 per year flat fee-based account that includes unlimited trading with the services of a dedicated representative

The best choice for a sophisticated self-directed customer that needs no guidance, and who trades 10 to 12 times per month, would be the:

A.
$10 per trade commission charge

B.
$100 per trade commission charge

C.
$1,000 annual fee-based structure

D.
$5,000 annual fee-based structure