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Official Practice ProblemFINRA Series 7 Blueprint: Function 3
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Question #2066Function 3Moderate

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?

Correct Choice: A

Exchange-listed equities (NYSE/Nasdaq) are marginable immediately. Options, new issues/IPOs, and mutual funds under 30 days old are non-marginable.

Complete Analysis & Legal Rationale

Under Regulation T: (1) Listed stocks and Nasdaq securities are fully marginable; (2) Standardized options (calls/puts under 9 months) cannot be bought on margin and must be paid in full (100% premium cash); (3) New issues, including IPOs, cannot be purchased on margin for 30 days under the Securities Exchange Act of 1934 Section 11(d)(1); (4) Mutual funds are new issues; shares must be owned for at least 30 days before they can be used as margin collateral.

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
None

Exchange-listed equities (NYSE/Nasdaq) are marginable immediately. Options, new issues/IPOs, and mutual funds under 30 days old are non-marginable.

Choice BIncorrect
Margin Principles Trap

Fails to adhere to margin rules for B.

Choice CIncorrect
Margin Principles Trap

Fails to adhere to margin rules for C.

Choice DIncorrect
Margin Principles Trap

Fails to adhere to margin rules for D.

Authorities & References:

Official Standard: Under Regulation T: (1) Listed stocks and Nasdaq securities are fully marginable; (2) Standardized options (calls/puts under 9 months) cannot be bough

Official SourceFederal Reserve Regulation T (12 CFR 220) — Margin Account Rules
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Regulatory Authority & Citations: Primary Legal Sources

Verified citations governing Question #2066 (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:

Federal ReserveRegulation T (12 CFR 220)— Margin Account Rules

Under Regulation T: (1) Listed stocks and Nasdaq securities are fully marginable; (2) Standardized options (calls/puts under 9 months) cannot be bough

Read Federal Reserve Official Rule
Curriculum Deep Dive • Chapter 9

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Question #1061 • FundamentalRegulation T 50% Initial Margin Requirement on Stock Purchase

Under Federal Reserve Board Regulation T, the initial margin requirement for purchasing marginable e...

Question #1062 • FundamentalFINRA $2,000 Minimum Initial Equity Requirement

While Reg T 50% of $3,000 would be $1,500, FINRA Rule 4210 mandates an initial minimum equity requir...

Question #1063 • FundamentalMargin Purchases Below $2,000: 100% Cash Deposit Requirement

Under FINRA Rule 4210, if the total purchase in a new margin account is LESS than $2,000, the custom...

Question #1064 • ModerateLong Margin Account Minimum Maintenance 25% Calculation

FINRA Rule 4210 requires minimum maintenance equity of 25% of LMV in a long margin account: 25% × $4...

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