Series 7 practice questionmediumMargin Accounts — Non-Marginable Securities
Which of the following securities is generally NOT eligible to be purchased on margin?
- ANYSE-listed common stock
- BU.S. Treasury bonds
- COptions contracts✓ Correct answer
- DNasdaq-listed stock trading above $5 per share
Explanation
Why C — Options contracts
Options contracts cannot be purchased on margin; they must be paid for in full. Other non-marginable securities include mutual funds held for less than 30 days, penny stocks (under $5 per share on OTC markets), and new issues during the first 30 days after the IPO. Exchange-listed stocks, Nasdaq stocks above $5, and U.S. government securities are generally marginable.
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