SIE practice questionmediumAccount Types: Margin Maintenance
In a margin account, what happens if equity falls below the maintenance requirement?
- AThe account will be closed immediately.
- BThe customer may borrow additional funds.
- CThe customer will receive a margin call to deposit more funds.✓ Correct answer
- DThe broker must sell all securities in the account.
Explanation
Why C — The customer will receive a margin call to deposit more funds.
When equity in a margin account falls below the maintenance requirement, the customer receives a margin call to deposit more funds or securities. The account is not automatically closed, and full liquidation is not mandatory unless the call is not met.
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