Margin CE - Continuing Education Exam

1. Credit from bank to broker is controlled under:

a. Regulation T
b. Regulation U
c. Regulation X
d. Regulation Z

2. Interest charges on customer debit balances are based on the:

a. Prime Rate
b. Federal Funds Rate
c. Treasury Bill Rate
d. Broker Loan Rate

3. The maximum amount of customer securities that can be rehypothecated by a broker is:

a. 50 % of the debit balance
b. 70 % of the debit balance
c. 100 % of the debit balance
d. 140 % of the debit balance

4. Under Regulation T, an extension for payment may be requested on:

a. Settlement Date
b. Settlement Date + 1
c. Settlement Date + 2
d. Settlement Date + 5

5. If a customer’s account is frozen:

a. no trading is permitted in the account for 30 days
b. no trading is permitted in the account for 90 days
c. purchases require cash in advance for 30 days
d. purchased require cash in advance for 90 days

6. What are initial and maintenance margins for stock positions in a long margin account ?

a. 50 / 50
b. 50 / 25
c. 50 / 30
d. 25 / 30




7. What are initial and maintenance margins for stock positions in a short margin account?

a. 50 / 50
b. 50 / 25
c. 50 / 30
d. 25 / 30

8. A customer buys 100 shares of ABC stock at $50 as an initial transaction in a margin account.
The customer must deposit:

a. $1000
b. $2000
c. $2500
d. $5000

9. A customer sells short 1000 shares of ABC stock at $8, as the initial transaction in a new margin account. The customer must deposit:

a. $2000
b. $2400
c. $4000
d. $5000

10. A customer has $10,000 to invest. What dollar amount of long call options can be purchased
by the customer?

a. $10,000
b. $20,000
c. $100,000
d. $200,000

11. Customer fails to deliver must be bought in:

a. 5 business days after trade date
b. 5 business days after settlement date
c. 10 business days after trade date
d. 10 business days after settlement date


12. All of the following securities are marginable EXCEPT:

a. Listed stocks
b. Over-the-counter NASDAQ stocks
c. U.S. Government bonds
d. New issues

Use the following information to answer the next 3 question:

A customer margin account shows:

100 shares of ABC @ 50
300 shares of DEF @ 80
200 shares of PDQ @ 30

Debit = $6,000
SMA = $11,500

Reg. T = 50 %

13. What is the equity in the account?

a. $35,000
b. $29,000
c. $23,500
d. $17,500

14. How much of other marginable common stocks can be purchased without making a deposit?

a. $6,000
b. $11,500
c. $12,000
d. $23,000

15. What is the minimum maintenance margin requirement?

a. $2,000
b. $8,750
c. $10,500
d. $17,500


16. Which of the following does not affect SMA in a long margin account?

a. purchase of securities
b. sale of securities
c. increase in market value
d. decrease in market value

17. A customer sells short 100 shares of ABC at 15 as an initial transaction in a new margin account. The customer must deposit:

a. $750
b. $1,500
c. $2,000
d. $2,500

18. The formula for equity in a combined margin account is:

a. long market value + short market value - credit balance - debit balance
b. long market value + short market value + credit balance - debit balance
c. long market value - short market value + credit balance - debit balance
d. long market value - short market value - credit balance + debit balance

19. Which of the following will not effect SMA in a short margin account?

a. purchase of securities
b. sale of securities
c. increase in market value
d. decrease in market value

20. A customer buys 5 ABC Jan 50 Calls @ $5 when the market price of ABC is $51. The
customer must deposit:

a. $500
b. $2500
c. $3000
d. $5000

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