Finra Exam Series-7 Topic 4 Question 99 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 99
Topic #: 4

[All Series-7 Questions]

Regulation T is set at 50%. Bubba's account contains long positions in the following securities with the prices listed:

100 ABC $30

200 XYZ $70

200 QBB $40

200 KKK $25

Total market value = $30,000

Debit balance in the account = $12,000

Net equity balance of the account = $18,000

If Bubba wants to buy 100 shares of DUM at $30 per share, how much additional money must be deposited?

A$3,000

B$1,500

C$2,000

D$0

Show Suggested Answer

Suggested Answer: D

$79. Bubba's breakeven is his cost of the stock less the premium he received ($83 - $4).

by Henriette at Sep 17, 2024, 08:30 PM

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Hillary

29 days ago

I'm just going to buy more KKK stocks - that ticker is clearly the key to success here. Who needs to worry about Regulation T when you've got the triple Ks on your side?

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I'm going with B) $1,500. It's just basic math - Bubba needs to have 50% of the total $30,000 market value in his account, which is $15,000. He already has $12,000, so he needs to deposit $3,000 to meet the requirement. Since he's buying $3,000 worth of DUM, he only needs to deposit $1,500 to make the trade.

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Isaiah

1 months ago

D) $0 seems like the right answer to me. Bubba's net equity is already $18,000, which is more than enough to cover the 50% Regulation T requirement for the new $3,000 purchase. He doesn't need to deposit any additional funds.

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Art

6 days ago

B) $1,500

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Justa

18 days ago

A) $3,000

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Quiana

2 months ago

I'm going with C) $2,000. Bubba's net equity is $18,000, and he needs to deposit enough to cover the 50% Regulation T requirement for the new $3,000 purchase. That means he needs to deposit $1,500 for the new shares, plus any additional funds to bring his account back up to the 50% requirement.

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Giuseppe

12 days ago

That makes sense, he needs to maintain the 50% requirement for Regulation T.

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Bette

13 days ago

So, Bubba needs to deposit $2,000 to cover the purchase of the new shares.

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Maryann

19 days ago

I think you're right, C) $2,000 sounds like the correct answer.

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Shawnna

2 months ago

I think the answer is B) $1,500. Bubba's net equity is $18,000, and the Regulation T requirement is 50%, so he can borrow up to $18,000 * 0.5 = $9,000. The cost of the new 100 shares of DUM at $30 per share is $3,000, and he already has $12,000 in his account, so he only needs to deposit $1,500 to make the trade.

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Tien

2 months ago

I'm not sure, but I think the answer is C) $2,000 because the total market value is $30,000.

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Armando

2 months ago

I agree with Timothy, because Bubba needs to deposit 50% of the purchase price.

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Timothy

3 months ago

I think the answer is A) $3,000.

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Finra Exam Series-7 Topic 4 Question 99 Discussion

Contribute your Thoughts:

Hillary

Berry

Isaiah

Art

Justa

Quiana

Giuseppe

Bette

Maryann

Shawnna

Tien

Armando

Timothy