Margin Accounts
A customer has $8,000 in SMA. What is their buying power for purchasing additional marginable securities?
Buying Power = SMA x 2. Since Reg T requires 50% margin, each dollar of SMA supports $2 in purchases. Therefore: $8,000 x 2 = $16,000 in buying power. The customer could purchase $16,000 of securities using $8,000 of SMA
Complete Analysis & Legal Rationale
Buying Power = SMA x 2. Since Reg T requires 50% margin, each dollar of SMA supports $2 in purchases. Therefore: $8,000 x 2 = $16,000 in buying power. The customer could purchase $16,000 of securities using $8,000 of SMA as the margin deposit.
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:
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Official Standard: Federal Reserve Regulation T margin/credit rules for broker-dealers (verify current text).
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.