Series 7 practice questioneasyMargin Accounts — Initial Margin Requirement
Under Regulation T, what is the initial margin requirement for purchasing securities in a margin account?
- A25% of the purchase price
- B50% of the purchase price✓ Correct answer
- C75% of the purchase price
- D100% of the purchase price
Explanation
Why B — 50% of the purchase price
Regulation T, established by the Federal Reserve Board, sets the initial margin requirement at 50% for the purchase of marginable securities. This means a customer must deposit at least 50% of the purchase price in cash or eligible securities when buying on margin. The remaining 50% is loaned by the broker-dealer.
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