FINRA Series 7

Category - Series 7

Bubba buys $100,000 of US Treasury 10½s of 31 on margin. If the current market price is 92.16, what is Bubba’s minimum deposit requirement?
  1. $4,625
  2. $5,550
  3. $10,000
  4. $25,000
Explanation
Answer: B - $5,500. The NYSE maintenance requirements on obligations of the US treasury vary depending upon the term of the instrument. For 20-year bonds, the requirement is 6% of the market value. Multiplying the market value of $92,500 by 6% equals $5,500.
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