Which of the Following Is True of the Securities Investor

question 17

Multiple Choice

Which of the following is true of the Securities Investor Protection Corporation (SIPC) ?

• A) It protects investors from losses up to $750,000 due to the financial failure of a brokerage firm.
• B) It has the monitoring and bailout functions that the Federal Deposit Insurance Corporation (FDIC) has in banking.
• C) It does not use trustees in any of its functions.
• D) It supervises the liquidation of brokerage firms that are in financial trouble.

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Definitions:

GAAP

Generally Accepted Accounting Principles; a framework of accounting standards, rules, and procedures defined by the professional accounting industry in a specific country.

Capitalize

The process of recording an expenditure as an asset, rather than an expense, thereby spreading the cost over its useful life.

Bargain Purchase Option

A clause in a lease agreement that allows the lessee the option to purchase the leased asset at a price below its expected fair market value.

Executory Costs

Executory costs are the ongoing operating expenses in a lease agreement, such as insurance, maintenance, and property taxes, usually borne by the lessee.