Examkin

Soru

Zorluk: KolayMargin Accounts and Borrowing Requirements

An investor opens a new margin account and executes a first-time transaction selling short 100 shares of XYZ stock at $50 per share. What is the minimum initial margin deposit required from the investor under Federal Reserve Regulation T and FINRA rules?

  1. $2,500Cevap
  2. B
    $2,000
  3. C
    $5,000
  4. D
    $1,500

Cevap

$2,500 deposit required
Under Federal Reserve Regulation T, the initial margin requirement is 50% of the trade value. For a 5,000shortsale,505,000 short sale, 50% equals 2,500. Because 2,500ishigherthanFINRA′sabsoluteminimuminitialequitythresholdof2,500 is higher than FINRA's absolute minimum initial equity threshold of 2,000, the investor is required to deposit $2,500.

Adım Adım Çözüm

1
Calculate the total market value of the short sale transaction.
100 shares × 50=50 = 5,000
Initial margin requirement calculations are based on the total position market value.
2
Calculate the Federal Reserve Regulation T initial margin requirement.
50% of 5,000=5,000 = 2,500
Regulation T mandates a 50% initial margin deposit on equity margin transactions.
3
Compare the Regulation T requirement against FINRA's minimum initial equity requirement.
The investor must deposit 2,500becauseitisgreaterthanFINRA′s2,500 because it is greater than FINRA's 2,000 minimum initial equity threshold.
An investor must deposit whichever amount is greater between the Regulation T requirement (50%) and FINRA's minimum equity requirement ($2,000).

Anahtar Kavram

Initial Margin Deposit Requirements under Regulation T and FINRA Rules
Bu soruyu puanla

Konular

Margin Accounts and Borrowing Requirements