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The initial FRB margin requirement is 50%. A customer has a margin account with a market value of $20,000, a debit balance of $12,000 and equity of $8,000. If the customer was to sell $1,000 worth of stock, the amount of the adjusted increase in the SMA would be:
$300
$400
$500
$1,000

$500

2 A customer is short 1,000 shares of ABC. If the current market price of ABC is $30 per share, what is the minimum maintenance requirement for equity in the account?
$2,500
$5,000
$7,500
$9,000

$9,000

A customer owns 20 ABC Corporation October 30 calls in a cash account. The customer exercises the calls and the same day sells the stock at $32. The customer will have to deposit into the account:
$20,000
$30,000
$60,000
No cash deposit is required

$60,000

Which TWO of the following statements are TRUE regarding the maintenance requirements for selling short stock that is trading at less than $5 per share?
The maintenance requirement for shorting a stock at $2.00 per share is 100% of the market value.
The maintenance requirement for shorting a stock at $2.00 per share is $2.50 per share.
The maintenance requirement for shorting a stock at $4.00 per share is 100% of the market value.
The maintenance requirement for shorting a stock at $4.00 per share is $2.50 per share.
I and III
I and IV
II and III
II and IV

II and III

A customer's margin account has a market value of $15,000, a debit balance of $8,000, and SMA of $1,000.
If the customer sold $1,000 of securities in the account, what amount could the customer withdraw after the sale?

None
$1,000
$1,500
$2,000

$1,500

6 How much may be withdrawn from a Special Memorandum Account?
2 times the SMA
3 times the SMA
25% of the SMA
100% of the SMA

100% of the SMA

When may a new issue become marginable?
3 days from the effective date
5 days from the effective date
30 days from the effective date
40 days from the effective date

30 days from the effective date

If a cash dividend is paid, how does it affect a margin account?
SMA is decreased.
Debit balance is reduced.
Market value is increased.
Equity is reduced.

Debit balance is reduced.

An investor purchased $200,000 of 6% general obligation bonds on margin. The customer has a debit balance of $50,000 and is paying interest of 10% yearly on the debit balance from the purchase of the municipal bonds. How much interest expense can the investor use as a deduction for federal income tax purposes?
None
$5,000
$10,000
$12,000

None

Which TWO of the following are TRUE regarding the hypothecation agreement in a margin account?
The broker-dealer pledges 100% of the debit balance in stock to the bank.
The broker-dealer pledges 140% of the debit balance in stock to the bank.
The bank loans 100% of the debit balance to the broker-dealer.
The bank loans 140% of the debit balance to the broker-dealer.
I and III
I and IV
II and III
II and IV

II and III

The market value of a margin account is $12,000. The debit balance is $6,000. A cash dividend of $100 is credited to the account. What is the new debit balance?
$5,900
$5,950
$6,000
$6,100

$5,900

Which of the following formulae would be used to determine the total equity in a combined margin account?
LMV + DR - CR - SMV
LMV - DR + SMV - CR
LMV + CR - DR - SMV
LMV - CR - DR + SMV

LMV + CR - DR - SMV

An investor establishes a short margin account and sells 1,000 shares of ABC short at 30. The value of the securities declines and SMA is created. All of the following would affect SMA EXCEPT:
The value of the securities continues to decrease
The value of the securities increases
Cash is withdrawn from the account
Using the selling power of the account

The value of the securities increases

A customer has a restricted margin account with a debit balance of $7,500. The account is credited with $1,600 in dividends and debited with interest charges of $50. The debit balance after the adjustments is:
$5,900
$5,950
$6,000
$6,050

$5,950

Regulation T applies to:
Cash accounts
Margin accounts
Commodity accounts
Municipal bond margin accounts
I and II only
II and III only
II and IV only
I, II, III, and IV

I and II only

A customer's initial trade in a margin account is the short sale of 500 shares of DEF stock at $20. After making the required deposit, the credit balance in the account is:
$5,000
$10,000
$15,000
$20,000

$15,000

A customer's initial trade in a margin account is the short sale of 500 shares of DEF stock at $20. After making the required deposit, the credit balance in the account is:
$5,000
$10,000
$15,000
$20,000

$15,000

1 The FRB initial margin requirement is 50%. A customer opening a new margin account with the purchase of 100 shares of XYZ at $15 per share would have to deposit:
$375
$750
$1,500
$2,000

$1,500

A customer purchases $10,000 of stock on margin. Before depositing the required amount, the stock rises to a market value of $12,000. How much will the customer be required to deposit?
$4,000
$5,000
$6,000
$7,000

$5,000

A customer sold short 1,000 shares of XYZ Corporation that is presently selling at $2 per share. Industry rules require a minimum maintenance margin of:
$0.33 per share
$2.00 per share
$2.50 per share
$2,000

$2.50 per share

A customer makes an initial purchase of 100 shares of XYZ on the NYSE at $30 per share. The Federal Reserve margin requirement according to Regulation T is 50%. The customer will have to deposit:
$1,500
$2,000
$2,500
$3,000

$2,000

A customer's combined long and short margin account appears as shown below:
Long Market Value =$30,000
Short Market Value =$18,000
Debit Balance =$ 8,000
Credit Balance=$15,000
What is the customer's combined equity?

$15,000
$19,000
$22,000
$35,000

$19,000

The Federal Reserve Board was given the authority to set margin requirements according to the provisions of the:
Securities Act of 1933
Securities Exchange Act of 1934
Securities Investors Protection Act of 1970
Investment Company Act of 1940

Securities Exchange Act of 1934

4 Mr. Jones, a client of XYZ brokerage firm, buys $12,000 of stock and on the same day sells short $10,000 of another stock. The Regulation T margin requirement is 50%.
The Regulation T margin call will be:

$2,000
$6,000
$7,200
$11,000

$11,000

6 A customer has a long margin account with a market value of $30,000 and a debit balance of $20,000. His short margin account has a $7,000 market value and a $10,000 credit balance. The FRB margin requirement is 50%.
How much cash can the customer withdraw from the account?

0
$10,000
$17,000
$23,000

0

A customer has a long margin account with a market value of $30,000 and a debit balance of $20,000. His short margin account has a $7,000 market value and a $10,000 credit balance. The FRB margin requirement is 50%.
What is the minimum equity requirement for the short position?

0
$2,100
$9,000
$11,000

$2,100

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