Official Practice ProblemFINRA Series 7 Blueprint: Function 3

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Question #1066Function 3Moderate

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?

Correct Choice: A

To find the exact market value at which a long account triggers a maintenance call: Market Value = Debit Balance ÷ 0.75. $18,000 ÷ 0.75 = $24,000.

Complete Analysis & Legal Rationale

At an LMV of $24,000 and DR of $18,000, Equity = $6,000. $6,000 ÷ $24,000 = exactly 25.0%. Any drop below $24,000 pushes equity below 25%, triggering a maintenance call.

Mathematical Step-by-Step Derivation

Step 1: Formula: Critical LMV = Debit Balance ÷ 0.75
Step 2: $18,000 ÷ 0.75 = $24,000.
Step 3: Verification: $24,000 - $18,000 = $6,000 (which is 25% of $24,000).

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:

Choice ACorrect

Accurate Shortcut Formula

$18,000 ÷ 0.75 = $24,000 exact maintenance trigger.

Choice BIncorrect

Wrong Maintenance Percent

Divides by 0.80 instead of 0.75.

Choice CIncorrect

Initial Margin Level Confusion

Multiplies by 2 (initial Reg T level).

Choice DIncorrect

Arbitrary Multiplier

Multiplies by 1.50.

Authorities & References:

Official Standard: Mathematical threshold formula for long maintenance calls.

Official SourceFINRA FINRA Rule 4210 — Maintenance Call Price Trigger

🏛️

Regulatory Authority & Citations: Primary Legal Sources

Verified citations governing Question #1066 (FINRA Series 7 Content Outline)

To pass the FINRA Series 7, candidates must understand not just the calculation formulas, but the exact federal securities acts, SRO rulebooks, and statutory frameworks that enforce them. Review the primary authority records below:

FINRAFINRA Rule 4210— Maintenance Call Price Trigger

Mathematical threshold formula for long maintenance calls.

Read FINRA Official Rule

Curriculum Deep Dive • Chapter 9

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