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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Shawnna

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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