Series 7 practice questionmediumMargin Accounts — Pattern Day Trader
A pattern day trader must maintain a minimum equity of:
- A$2,000
- B$10,000
- C$25,000✓ Correct answer
- D$50,000
Explanation
Why C — $25,000
FINRA rules require pattern day traders to maintain minimum equity of $25,000 in their margin account at all times. If equity falls below $25,000, the trader is prohibited from day trading until the minimum is restored. Pattern day traders also receive increased buying power of up to 4 times their maintenance margin excess, compared to the standard 2 times for regular margin accounts.
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