Question

An investor opens an account with BNZ Government Securities, a broker-dealer limiting its transactions exclusively to securities issued by the U.S. government. The account holds $250,000 of Treasury bonds, $250,000 of Treasury notes, and $50,000 in cash. If BNZ's broker-dealer business should fail, the investor would receive SIPC protection in the amount of:
A. All of the securities & all of the cash, because U.S. Gov't Securities do not go bankrupt.
B. $50,000 of the cash & $450,000 of the securities.
C. $0.00.
D. $500,000 of the securities, none of the cash.

Answer 1

Answer: Option (C)

Explanation:

From the following given case/scenario , we can state that the investors would receive $0 as SIPC protection in case if the business of BNZ's broker dealer fails. Although vast majority of the broker dealers are needed to be the members of the S.I.P.C, those who tend to deal in the United States government securities are mostly  exempt.