A customer opens a new margin account and executes a first-time long purchase of 50 shares… — FINRA SIE (Securities Industry Essentials)

A customer opens a new margin account and executes a first-time long purchase of $50$ shares of a marginable stock at $\$25$ per share. Under Federal Reserve Regulation T and FINRA margin rules, what is the minimum required initial cash deposit for this transaction?

$1,250$ Cevap
B
$625$
C
$2,000$
D
$2,500$

Cevap

The minimum required initial cash deposit is

1,250

Under Federal Reserve Regulation T, the initial margin requirement is 50% of the purchase price, which would be

625. However, FINRA Rule 4210 establishes a minimum initial equity requirement of

2,000 for opening margin positions. For purchases under

2,000, the rule states that the customer must deposit 100% of the purchase price. Since the total purchase price is

1,250 (50 shares at

25), the customer must deposit

1,250 in cash.

Adım Adım Çözüm

Calculate the total purchase value

50 shares \times

25 =

1,250

Determining the total transaction amount is necessary to evaluate Regulation T and FINRA initial equity requirements.

Evaluate Federal Reserve Regulation T requirement

50\% \times

1,250 =

625

Regulation T mandates an initial deposit of 50% of the total purchase amount.

Apply FINRA Rule 4210 minimum initial equity rule

Deposit required = $1,250 (100% of purchase value)

FINRA rules require a minimum equity of

2,000 for a new margin transaction. However, if the total purchase price is less than

2,000, the customer must deposit 100% of the purchase value.

Anahtar Kavram

FINRA Minimum Initial Equity Exception for Small Margin Purchases

Soru

Cevap

Adım Adım Çözüm

Anahtar Kavram

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