A delivery check separates free and pledged holdings
Series VI practice case · 4 questions · 1 mark each
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A demat account shows 500 shares of a company. Of these, 200 shares are pledged and unavailable for ordinary delivery in this exercise. No pledge release has been received. The client wants to deliver 350 shares for a sale. A separate purchase of 100 shares is expected, but the operations team must not treat expected securities as available until the credit is confirmed. Consider two stages: first, before the purchase credit. Second, after all 100 purchased shares have actually been credited and before the sale delivery. There are no other debits, credits or blocks. The 200-share pledge remains throughout.
No statutory settlement deadline is assumed.
Only confirmed free balances are available for delivery in this exercise.
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The case and its answers
Every question of this case, with its answer and why each other option is wrong.
A demat account shows 500 shares of a company. Of these, 200 shares are pledged and unavailable for ordinary delivery in this exercise. No pledge release has been received. The client wants to deliver 350 shares for a sale. A separate purchase of 100 shares is expected, but the operations team must not treat expected securities as available until the credit is confirmed. Consider two stages: first, before the purchase credit. Second, after all 100 purchased shares have actually been credited and before the sale delivery. There are no other debits, credits or blocks. The 200-share pledge remains throughout.
No statutory settlement deadline is assumed.
Only confirmed free balances are available for delivery in this exercise.
Q1Before the purchase credit, how many shares are free for delivery?
Option A. 300 shares — Correct answer
Option B. 200 shares
Why it is wrong: This is the pledged quantity, not the free quantity.
Option C. 400 shares
Why it is wrong: This anticipates an unconfirmed purchase credit.
Option D. 500 shares
Why it is wrong: This includes the 200 pledged shares.
Answer: A. Free balance = 500 − 200 = 300 shares. The expected purchase is not yet a confirmed credit. Remember: Total holdings and deliverable holdings can differ.
Hint, shown before you answer in practice mode: Deduct the pledged quantity from confirmed holdings.
VI-P-C01-Q1easynumerical
Q2At the first stage, by how many shares does the requested delivery exceed the free balance?
Option A. 50 shares — Correct answer
Option B. 100 shares
Why it is wrong: This is the expected purchase size.
Option C. 150 shares
Why it is wrong: This subtracts the pledged balance from the delivery quantity.
Option D. Zero shares
Why it is wrong: This wrongly counts the unconfirmed credit or pledged shares as deliverable.
Answer: A. The shortfall is 350 − 300 = 50 shares. The team must resolve the availability issue before relying on the instruction. Remember: A reconciliation must identify the exact shortage.
Hint, shown before you answer in practice mode: Compare the delivery instruction with the confirmed free balance.
VI-P-C01-Q2mediumnumerical
Q3After the 100-share purchase is confirmed, what is the free balance before delivery?
Option A. 100 shares
Why it is wrong: This counts only the newly purchased shares.
Option B. 400 shares — Correct answer
Option C. 600 shares
Why it is wrong: This still includes the pledged 200 shares.
Option D. 300 shares
Why it is wrong: This ignores the confirmed new credit.
Answer: B. Free balance = 500 + 100 − 200 = 400 shares. The requested 350-share delivery can now be supported by the stated balance. Remember: Availability changes only when relevant credits or releases are confirmed.
Hint, shown before you answer in practice mode: Add confirmed purchases, then subtract the continuing pledge.
VI-P-C01-Q3mediumnumerical
Q4After delivering 350 shares at the second stage, which remaining balance is correct?
Option A. 400 total shares, including 200 pledged
Why it is wrong: This does not deduct the full sale delivery from total holdings.
Option B. 250 total shares, all free
Why it is wrong: The pledge was never released.
Option C. 250 total shares, including 200 pledged and 50 free — Correct answer
Option D. 50 total shares, all free
Why it is wrong: This ignores the continuing pledged holdings.
Answer: C. Total holdings = 500 + 100 − 350 = 250. The pledge remains 200, leaving 50 free shares. Remember: Track total, encumbered and free positions separately.
Hint, shown before you answer in practice mode: Reconcile both total holdings and the encumbrance separately.
VI-P-C01-Q4hardnumerical
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