Series 7  General Securities Representative Exam
An investor has a margin account with $120,000 market value and $42,000 debit balance. If the investor wants to purchase an additional $60,000 of stock in this account, what amount must the investor deposit?
Explanations
Assuming Reg T at 50%, the investor would usually have to have to deposit $30,000 to meet the margin call. However, we have to figure out if there is any excess equity in his margin account to help with the $30,000 payment. LMV – DR = EQ. We have $120,000 worth of securities and we subtract the debit balance of $42,000. We now have $78,000 for EQ. Take 50% of the LMV for Reg T which gives us $60,000. subtract the debit balance of $42,000 and we know he has $18,000 more than necessary. This 18K is the SMA  Special Memorandum Account which he can use to offset the margin call for the 60,000 of stock he wants to buy. He needs ($30,000 at 50% Reg T) to buy the new stock. Subtracting the 18,000 SMA excess, he needs to deposit $12,000 to make the trade
Pricing
Basic
Part of the questions for each course

 Course
 Questions

 SIE
 20 of 150

 Series 6
 30 of 500

 Series 7
 50 of 625