Question

An investment adviser that is a sole proprietor finds that its net worth (net capital) has fallen below the minimum requirement. What asset can an owner of the advisory firm contribute to bring the net worth back above the minimum requirement? A copyright on a book owned by the individual A B A couch from the owner's home An automobile owned by the individual Co A mutual fund position owned by the individual

Answer 1

A mutual fund position that is owned by the individual should be contributed to bring back the position of the advisory firm.

Answer: Option D

Explanation:

Net worth is the value of the firm of all the financial and the non financial assets which the firm owns. The outstanding liabilities of the firm are deducted from the net worth.

Mutual funds have the flexibility where they can manage the cash positions according to themselves. They can be followed by the market speculators and can be used to know the net worth in the market.