Lucky the Banker mascotLTB
← Series 7: Investment Information & Recommendations
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.

Turn it into reps

Reading one answer is not the same as being ready

Lucky the Banker is a free practice app with 758+ Series 7 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.

Practice Series 7 freeSeries 7 exam guide

Spot an error in this question or explanation? Tell us — we fix these fast.

Related Investment Information & Recommendations questions