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?
Under FINRA Rule 4210, if the total purchase in a new margin account is LESS than $2,000, the customer must pay 100% of the purchase price in cash ($1,500). A customer is never required to deposit more than the purchase price.
Complete Analysis & Legal Rationale
The $2,000 minimum equity rule does not force customers to deposit $2,000 for a $1,500 purchase. Instead, the customer pays $1,500 in full, resulting in $1,500 equity and a $0 debit balance.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Customer deposits 100% of the cost ($1,500); no loan is extended.
Customers are NEVER required to deposit more than the total cost of the purchase.
$750 violates the minimum equity rule.
Arbitrary incorrect figure.
Official Standard: Transactions under $2,000 must be paid in full.