Regulation T 50% Initial Margin Requirement on Stock Purchase
An investor with a new margin account purchases 400 shares of XYZ stock at $50 per share ($20,000 total). Assuming Regulation T is 50%, what is the required initial margin deposit?
Series 7 Margin Accounts Practice Questions & SMA Calculations
Crush long and short margin accounting, Reg T 50% initial requirements, FINRA $2,000 minimum equity rules, Special Memorandum Account (SMA) creation, and maintenance margin calls.
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📋 FINRA Blueprint Weighting Notice:
Margin accounts account for approximately 10 to 14 questions on the Series 7. Candidates must memorize the balance sheet formulas and know exactly what happens to SMA when stock values rise or fall.
Essential Rules & Calculation Shortcuts for Series 7 Margin Accounts
Long Margin Equation
LMV - DR = EQAssets (Long Market Value) minus Loan (Debit Register) equals Customer Equity.
Short Margin Equation
CR - SMV = EQCredit Balance minus Short Market Value equals Customer Equity.
FINRA Minimum Maintenance
Long: 25% of LMV | Short: 30% of SMVFailure to maintain this triggers a maintenance margin call.
Maintenance Call Price Levels
Long: DR ÷ 0.75 | Short: CR ÷ 1.30Quick calculation trick to find the critical market price before a call is issued.
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Official Regulatory Authorities & Rulebooks (Series 7 Margin Accounts)
Primary legal statutes and self-regulatory organization (SRO) standards governing this topicEvery practice question in this module is derived directly from FINRA, SEC, MSRB, and federal statutes. You can review the official texts via the verified links below:
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SMA Calculations & Purchasing Power Guide →
Master the rules of SMA generation, purchasing power, and market drop non-declines.
Practice Question Bank (30 Scored Items)
Click any choice to test your answer with instant feedbackFINRA $2,000 Minimum Initial Equity Requirement
An investor opens a new margin account and places an initial order to buy 100 shares of ABC stock at $30 per share ($3,000 total). Under Regulation T and FINRA rules, what is the required initial cash deposit?
Margin Purchases Below $2,000: 100% Cash Deposit Requirement
An investor opens a margin account and buys 100 shares of a marginable stock at $15 per share ($1,500 total). How much cash must the customer deposit?
Long Margin Account Minimum Maintenance 25% Calculation
A customer has a long margin account with Long Market Value (LMV) of $40,000 and a Debit Balance (DR) of $32,000. Customer equity is currently $8,000. Under FINRA rules, what is the minimum maintenance requirement, and has a maintenance call occurred?
Short Margin Account Minimum Maintenance 30% Calculation
A customer sells short 1,000 shares of stock at $30 per share. The Credit Balance is $45,000 ($30,000 sales proceeds + $15,000 Reg T deposit). If the Short Market Value (SMV) rises to $36,000, what is the customer's equity, and does a maintenance call occur?
Long Margin Maintenance Call Trigger Formula (Debit ÷ 0.75)
An investor has a long margin account with a Debit Balance of $18,000. At what Long Market Value (LMV) will the account receive a minimum maintenance call?
Short Margin Maintenance Call Trigger Formula (Credit ÷ 1.30)
An investor establishes a short position and has a total Credit Balance of $26,000. At what Short Market Value (SMV) will the account receive a minimum maintenance call?
Special Memorandum Account (SMA) Creation on Market Appreciation
A customer opens a margin account and buys 1,000 shares of stock at $40 ($40,000 total), depositing $20,000 cash under Reg T. The market value rises to $50,000. How much SMA is generated by this price increase?
SMA Preservation Principle During Market Downturns
A margin account has an LMV of $60,000, DR of $30,000, and an SMA balance of $8,000. The market value subsequently drops to $45,000. Assuming no customer withdrawals or transactions, what is the NEW SMA balance?
Margin Account Buying Power Calculation (2x SMA)
An investor's margin account shows an SMA balance of $7,000. If Regulation T is 50%, what is the customer's total BUYING POWER for marginable stock?
Cash Withdrawal via SMA: Debit Balance and Equity Impact
An investor has an account with LMV $50,000, DR $20,000, EQ $30,000, and SMA $5,000. If the customer withdraws $3,000 in cash from the account, what are the new DR, EQ, and SMA balances?
Short Sale Margin Rules for Low-Priced Stocks (Under $5/Share)
An investor sells short 1,000 shares of a low-priced stock trading at $2.00 per share ($2,000 total value). Under FINRA Rule 4210, what is the required initial margin deposit?
Pattern Day Trader Definition and $25,000 Minimum Equity Rule
Under FINRA Rule 4210, an investor is designated as a 'pattern day trader' if she executes:
Hypothecation and Broker-Dealer Rehypothecation Limit (140% of DR)
A customer purchases stock on margin with a Long Market Value of $50,000 and a Debit Balance of $20,000. Under SEC Rule 15c2-1, what is the maximum dollar amount of customer securities the broker-dealer can rehypothecate (pledge to a bank) to secure the loan?
Portfolio Margin (Risk-Based) vs. Regulation T Strategy Margin
Compared to traditional Regulation T margin accounting, what is the primary operational advantage of Portfolio Margin for sophisticated options and equity accounts?
Regulation T vs. FINRA Rule 4210: Initial Deposit and the $2,000 Minimum Rule
A customer opens a new margin account and enters a market order to buy 100 shares of a technology stock at $32 per share ($3,200 total purchase value). What is the minimum required dollar deposit the customer must make under Federal Reserve Regulation T and FINRA Rule 4210?
Long Margin Account: 25% Minimum Maintenance Threshold & Margin Call Level
A customer purchases $40,000 of stock on margin, depositing the required 50% ($20,000) under Regulation T. The debit balance is $20,000. Under FINRA Rule 4210, to what market value can the stock decline before the customer receives a maintenance margin call?
Short Margin Account: 30% Minimum Maintenance Threshold Calculation
A customer sells short 1,000 shares of Gamma Corp at $60 per share ($60,000 Short Market Value) in a margin account, depositing the required 50% ($30,000). The credit balance is $90,000 ($60,000 proceeds + $30,000 deposit). To what price can Gamma Corp rise before a maintenance margin call is triggered under FINRA Rule 4210?
Special Memorandum Account (SMA): Creation, Buying Power, and Market Drops
A customer's margin account has a Long Market Value of $60,000 and a Debit Balance of $20,000 (Equity = $40,000). Regulation T is 50%. What is the balance in the customer's Special Memorandum Account (SMA), and how much additional stock can the customer purchase using buying power without depositing cash?
Hypothecation Agreement: Customer Collateral and the 140% Rehypothecation Cap
A margin customer purchases $100,000 of securities on margin and carries a debit balance of $40,000 (the loan from the broker-dealer). Under SEC Rule 15c2-1, what is the maximum dollar amount of the customer's securities that the broker-dealer is legally permitted to pledge (rehypothecate) to a commercial bank as collateral for a bank broker loan?
Marginable vs. Non-Marginable Securities under Federal Reserve Rules
Under Federal Reserve Board regulations, which of the following securities is ELIGIBLE to be purchased on margin and used as collateral immediately upon initial purchase?
Regulation SHO: Locate Requirement and Naked Short Sale Prohibition
Before accepting a customer's order to sell short 5,000 shares of an exchange-traded stock, what affirmative compliance action must the broker-dealer take under SEC Regulation SHO Rule 203(b)?
Restricted Margin Accounts: Definition, Trading Rules, and Retention Requirements
A margin account has a Long Market Value of $50,000 and a Debit Balance of $28,000 (Equity = $22,000). Regulation T is 50%. How is this account classified, and what occurs if the customer sells $10,000 of stock?
Pattern Day Trader (PDT): Definition, $25,000 Minimum Equity, and PDT Calls
An investor executes four day trades (opening and closing the same equity position within the same business day) over a rolling 5-business-day period in a margin account. What is the investor's regulatory classification, and what is the minimum equity requirement under FINRA Rule 4210?
Shorting Low-Priced Stocks: Special Minimum Maintenance Rules under FINRA Rule 4210
A customer sells short 1,000 shares of a micro-cap equity currently trading at $3.00 per share ($3,000 total Short Market Value). What is the minimum required dollar deposit under FINRA Rule 4210's low-priced stock margin rules?
Portfolio Margining: Risk-Based TIMS Model vs. Strategy-Based Margin
How does portfolio margin differ from traditional Strategy-Based (Regulation T) margin for eligible high-net-worth and institutional retail investors under FINRA Rule 4210?
Combined Margin Account: Long Market Value, Short Market Value, and Net Equity
A customer's margin account contains both long and short positions with the following balances: Long Market Value (LMV) = $120,000; Short Market Value (SMV) = $50,000; Debit Balance = $60,000; Credit Balance = $75,000. What is the net equity in this combined margin account?
Margin Interest: Tax Deductibility and Net Investment Income Limits
An investor incurs $6,000 in margin interest expense on funds borrowed to purchase dividend-paying corporate equities in a margin account. The investor earns $4,000 in taxable dividend income during the tax year. For federal income tax purposes, how much of the margin interest is deductible under IRS rules?
Failure to Meet Regulation T Call: T+4 Broker-Dealer Liquidation Obligation
A customer purchases $10,000 of stock in a margin account and fails to deposit the required $5,000 Regulation T margin call by the payment deadline (T+4 business days). No extension is granted by FINRA. What action is the broker-dealer required to take?
Exempt Securities from Regulation T: U.S. Treasuries, Agencies, and Municipal Debt
Which of the following fixed-income securities is EXEMPT from Federal Reserve Regulation T initial margin rules, and is instead governed by FINRA Rule 4210 maintenance margins?