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FINRA Series 7

Category - Series 7

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Bubba’s margin account has $1,000 of SMA. If he buys $20,000 of listed securities, how much fully paid margin stock must he deposit to respond to a Reg T requirement of 50%?

$20,000
$9,000
10,000
$18,000

Explanation

Answer: D - $18,000. Fully paid marginable stock equal to the value of the purchase satisfies the requirement. Since Bubba’s account already has $1,000 of SMA, this comprises buying power of $2,000. Therefore he only needs to deposit the remaining $18,000.

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