Finra Exam Series-7 Topic 7 Question 47 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 47
Topic #: 7

The initial Federal Reserve Bank margin requirement is set at 60% and Bubba purchases 100 shares of XYZ at $100 per share. He deposits $6,000 of the $10,000 purchase price in his account.

If XYZ increases in value to $150 per share, how much excess equity would Bubba have in his account?

A$1,000

B$1,500

C$2,000

D$3,000

Show Suggested Answer

Suggested Answer: C

$2,000. Bubba started with $6,000 of equity and a debit balance of $4,000. The market value of his XYZ stock increased by $5,000 ($15,000 - $10,000). Therefore, his equity increased to $11,000. Since Bubba only needs 60% equity, his Reg T requirement is $9,000 ($15,000 x 60%). His equity exceeds the requirement by $2,000.

by Shawnda at May 04, 2022, 11:33 PM

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