Series 24 Net Capital Practice Questions

Correct answer: A. $320,000

Under the basic method a carrying firm must maintain the greater of $250,000 or 6 2/3% of aggregate indebtedness. 6 2/3% of $4,800,000 is $320,000, which exceeds the $250,000 floor.

• AA. Correct: 6 2/3% x $4,800,000 = $320,000, which is greater than $250,000.
• BB. This is the dollar floor, but the percentage test produces a higher figure, and the greater of the two applies.
• CC. This applies 10% of aggregate indebtedness, which is not the Rule 15c3-1 percentage.
• DD. Incorrect: 15% of $4,800,000 is $720,000, but that rate is not the percentage minimum. It likely comes from confusing the percentage test with the 15-to-1 maximum ratio of aggregate indebtedness to net capital. The actual percentage minimum is 6 2/3% of aggregate indebtedness.

• Source: SEC Rule 15c3-1 (net capital requirements), accessed October 2026

Correct answer: A. SEC customer-protection possession-or-control requirements.

The customer protection rule requires a broker-dealer to maintain possession or control of customers' fully paid and excess-margin securities. Using them for proprietary short positions without proper authority defeats that safeguard.

• AA. Misuse of fully paid customer securities directly implicates the possession-or-control requirements.
• BB. Prospectus-delivery exemptions concern offering documents and have nothing to do with custody of customer securities.
• CC. Syndicate rules govern municipal underwritings, not custody of customers' fully paid securities.
• DD. Advertising approval is a communications matter unrelated to safeguarding customer securities.

• Source: 17 CFR § 240.15c3-3, accessed October 2026

Correct answer: A. $5,000

Under SEC Rule 15c3-1(a), a broker-dealer that does not carry customer accounts, does not hold customer funds or securities, and promptly transmits all customer checks and securities to another broker-dealer that carries the accounts is subject to the lowest minimum net capital tier: $5,000.

• AA. A broker-dealer that does not carry customer accounts, does not hold customer funds or securities, and promptly transmits everything it receives to the carrying firm qualifies for the lowest minimum net capital tier of $5,000 under Rule 15c3-1.
• BB. $50,000 corresponds to a different, higher-obligation category of broker-dealer, not this fully-disclosed, non-carrying introducing firm.
• CC. $100,000 applies to firms with greater responsibilities (e.g., certain market makers or firms handling customer funds), not this pass-through introducing broker.
• DD. $250,000 applies to firms carrying customer accounts or with broader responsibilities, which does not describe this firm.

• Source: Exam outline: FINRA Series 24 Content Outline, accessed October 2026

Correct answer: C. Office furniture, leasehold improvements, and prepaid rent on the firm's main office

Net capital is a liquidity measure, so assets that cannot be readily converted to cash, such as fixed assets and prepaid expenses, are non-allowable and are deducted in full under Rule 15c3-1. Liquid assets stay in the computation, with haircuts applied to securities.

• AA. Currently collectible receivables from a clearing firm are allowable assets, so they are not deducted in full.
• BB. Marketable listed securities are allowable; they are reduced by a percentage haircut rather than deducted in full.
• CC. Furniture, leasehold improvements, and prepaid rent cannot be quickly converted to cash to meet customer or creditor claims, so each is a non-allowable asset.
• DD. Cash at a bank is the most liquid allowable asset and is not deducted.

• Source: Exam outline: FINRA Series 24 Content Outline, accessed October 2026

Correct answer: A. To ensure a broker-dealer maintains sufficient liquid assets to meet its obligations to customers and creditors, including in a liquidation

SEC Rule 15c3-1, the Net Capital Rule, is designed to ensure broker-dealers maintain sufficient liquid assets to satisfy their obligations to customers and other creditors, particularly if the firm must cease operations and liquidate. It is not a rate-setting rule, an account-limit rule, or an investment mandate.

• AA. Rule 15c3-1 exists to ensure a broker-dealer maintains sufficient liquid assets to meet its obligations to customers and creditors, including in the event of liquidation. This is its core purpose.
• BB. The rule has nothing to do with limiting the number of customer accounts a firm may open or maintain relative to its representatives.
• CC. The Net Capital Rule does not set commission rates, with or without SEC approval; that concept is unrelated to its purpose.
• DD. The rule does not require firms to invest excess capital in government securities held at a custodian; it sets minimum liquid capital standards, not investment mandates.

• Source: Exam outline: FINRA Series 24 Content Outline, accessed October 2026

Correct answer: A. $470,000

Tentative net capital of $500,000 is reduced by the required haircut on proprietary positions. The $200,000 common stock position carries a 15% haircut ($30,000), while the short-term Treasury bills maturing within 45 days carry a minimal, near-zero haircut under the Rule 15c3-1 schedule. Net capital = $500,000 - $30,000 = $470,000.

• AA. Correct. Applying a 15% haircut to the $200,000 common stock position removes $30,000, while the T-bills maturing within 45 days carry a negligible/near-zero haircut under Rule 15c3-1's schedule, leaving net capital at $500,000 − $30,000 = $470,000.
• BB. Incorrect. $440,000 comes from deducting a 30% haircut ($60,000) on the $200,000 stock position. That is double the 15% haircut Rule 15c3-1 applies to equities with a ready market. Applying 15% gives a $30,000 deduction.
• CC. $500,000 ignores the required equity haircut entirely. Rule 15c3-1 requires deducting a haircut for the proprietary stock position, so net capital is lower than tentative net capital.
• DD. Incorrect. $300,000 comes from deducting the full $200,000 value of the stock position, as if it were a non-allowable asset. A haircut removes only a percentage of a marketable security's value, not all of it. For equities that percentage is 15%.

• Source: Exam outline: FINRA Series 24 Content Outline, accessed October 2026

Correct answer: D. $250,000

Rule 15c3-1 sets tiered minimum net capital requirements based on business activity. A firm that carries customer accounts and holds customer funds or securities is subject to the highest standard minimum among these choices, $250,000, reflecting the greater risk of holding customer assets. Firms with more limited activities (e.g., introducing firms that promptly transmit funds and don't hold customer assets, or firms that only execute trades) are subject to lower tiered minimums.

• AA. Incorrect. $5,000 corresponds to a much more limited business model, not a carrying firm holding customer funds/securities.
• BB. Incorrect. $50,000 corresponds to firms that do not carry customer accounts and do not hold customer funds/securities.
• CC. Incorrect. $100,000 corresponds to certain introducing firms that promptly transmit customer funds/securities without holding them.
• DD. Correct. $250,000 is the minimum for broker-dealers that carry customer accounts and hold customer funds or securities.

• Source: SEC Rule 15c3-1 (net capital requirements), accessed October 2026

Correct answer: B. Promptly investigate and remediate under customer protection procedures and required time frames

Rule 15c3-3 possession or control requirements protect customer property. A deficiency must be promptly investigated and cured within required time frames.

• AA. A customer-securities shortfall is not firm profit.
• BB. Correct: prompt investigation and remediation under customer protection procedures.
• CC. Deferring to an annual audit ignores the required prompt cure and reporting.
• DD. Customer securities cannot be used as the firm's working capital.

• Source: 17 CFR § 240.15c3-3, accessed October 2026