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July 16, 2018
 
 

Exam - Cash versus Margin Accounts

1. The Reg T amount is:

a) 20%
b) 30%
c) 40%
d) 50%

2. You just opened a brokerage account with $2,000 cash. You then bought 100 shares of a $20 stock on margin. What is your initial Reg T amount?

a) $500
b) $1,500
c) $1,000
d) $2,000

3. Your account has a market value of $30,000 and a debit balance of $10,000. What is your equity percentage?

a) 50%
b) 33%
c) 66%
d) 75%

4. Your account has a market value of $20,000 and a debit balance of $12,000. Which market value will just keep you out of maintenance? (Assume your broker has a 35% requirement.)

a) $17,443
b) $18,461
c) $16,950
d) $18,005

5. If your equity falls below 50%, the account is:

a) Restricted
b) Closed
c) In maintenance
d) Cannot be traded

6. What is perhaps the biggest disadvantage in having a margin account?

a) You can lose more money than what you have in it
b) You gain SMA
c) You lose SMA
d) You must post 50% margin

7. You bought 200 shares of stock for $30 and deposited 50% of the amount. Later, the stock falls to $28 per share. What is your percent equity?

a) 55%
b) 46%
c) 42%
d) 37%

8. If you open a "cash" account, all purchases must be paid for by which amount?

a) 100%
b) 50%
c) 35%
d) You cannot buy stock in a "cash" account

9. "Equity divided by market value" is the formula for:

a) Market value percent
b) Debit balance
c) Maintenance call level
d) Equity percent

10. Which of the following formulas shows how far the value of your market value can fall before falling into maintenance?

a) Debit balance / complement of house percent
b) Debit balance / house percent
c) House percent * Market value
d) House percent * complement of market value


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