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Series 7 practice questionmediumMargin Accounts — Restricted Accounts

A long margin account is considered "restricted" when:

  1. AEquity falls below the 25% maintenance requirement
  2. BEquity falls below the 50% Reg T initial requirement✓ Correct answer
  3. CThe debit balance exceeds the market value
  4. DThe client has not made a trade in 90 days
Explanation

Why B — Equity falls below the 50% Reg T initial requirement

A margin account becomes restricted when equity falls below the Reg T 50% requirement due to a decline in market value. A restricted account does not trigger a margin call (that occurs at the maintenance level), but the investor cannot purchase additional securities without depositing at least 50% of any new purchase. The investor may still hold existing positions in a restricted account.

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