Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Investment Company and Variable Contracts Products Principals Exam with our interactive quiz. Master key concepts with multiple choice questions designed to enhance your understanding and boost your confidence for the Series 26.

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What is the maximum duration for a temporary subordinated loan?

30 days
45 days
60 days
90 days

The correct answer is: 45 days

The correct answer is based on regulations governing temporary subordinated loans, which are often utilized by broker-dealers to meet net capital requirements. Specifically, these loans must have a maximum duration of 45 days. This limited time frame is designed to ensure that such loans are indeed temporary and do not become a long-term financing solution, thus maintaining the integrity of capital adequacy standards. In a regulatory context, these loans are considered a method to provide additional capital for a short period, and by limiting the duration, regulators can effectively manage the risk associated with the cash flow and financial stability of broker-dealers. Understanding this timeframe is crucial for compliance and operational practices within the financial industry.