Settlement and Cash Account Quiz

A cash account stays simple right up until two trades land on the same day. Work out these settlement dates and cash balances now, before a real trade asks you the same thing.

AI-assisted, reviewed by Ryza Glorioso →

Questions: 10
Level: Beginner
Time: 5 min

Question 1 of 10

1You sell shares of a US stock on a Friday, and the following Monday is a market holiday. Under T+1, when does the sale settle?

A The following Monday B The same Friday, after the close C The following Tuesday D The following Wednesday

2You buy shares on Tuesday morning with settled cash. When can you sell them?

A As soon as the buy fills, since you own them from the trade date B Wednesday, once the purchase has settled C Thursday, two business days after the trade D Only after the shares have been held overnight

3Your cash account has no settled cash. On Wednesday morning you sell stock X for 3,000, use those proceeds to buy 50 shares of Y at 58.00 for 2,900, then sell Y that afternoon. What have you done?

A Freeriding, since Y was never paid for B A good faith violation C Nothing wrong, since the X proceeds covered Y D Created a margin call in the account

4You start Monday with 1,500 of settled cash. You buy 150 shares at 30.00 for 4,500, sell them that afternoon at 30.80 for 4,620, and the sale covers the purchase. What is this, and what generally follows?

A A good faith violation, usually just a warning B No violation, because the trade made a profit C A margin call for the 3,000 shortfall D Freeriding, generally with a 90-day restriction

5You start Monday with 8,000 of settled cash. You buy 4,000 of stock A and sell it for 4,100, then buy 4,000 of stock B and sell it for 3,940. How much settled cash do you have on Tuesday?

A 8,040 B 8,000 C 4,100 D Nothing until Wednesday

6You make several same-day round trips in a cash account, each one paid for with settled cash. What limits how often you can do this?

A A count of four day trades in five business days B A 25,000 minimum equity requirement C Settled cash, since each dollar funds one round trip until the proceeds settle D An intraday margin deficit worked out after each trade

7A stock goes ex-dividend on a Thursday, with no holiday that week. Under T+1, what's the last day you can buy it and still get the dividend?

A Thursday, the ex-dividend date itself B Wednesday, the business day before C Tuesday, two business days before D Friday, the business day after

8In a cash account you sell stock on Friday and use the unsettled proceeds to buy a different stock that same Friday. With no holiday, what's the earliest you can sell the new stock without a good faith violation?

A Later that Friday B Tuesday C Wednesday D Monday

9Your cash account balances page shows cash available to trade of 7,500 and settled cash of 5,000. Which figure should you buy with if you want to rule out a good faith violation?

A Cash available to trade, since the broker allows it B Settled cash, since the rest is unsettled proceeds C The average of the two balances D Either one, as long as you hold overnight

10You rack up a few good faith violations within a year in a cash account. Which is the most accurate description of what happens?

A The account is closed and all positions are sold B Nothing, since each trade executed normally C A restriction to settled cash only, with terms set by your broker D A fixed 90-day freeze, the same at every US broker

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