Discuss American Bankers Association CRCM Exam Topic 4 Question 128

First National Bank has made a loan to Mr. Good, secured by margin stock, to purchase margin stock. He trades stocks frequently, makes substitutions on loan collateral regularly, and sometimes withdraws collateral and does not replace it. Must FNB ensure that margin requirements are met after every substitution and withdrawal?

AYes. The margin requirements must be met at all times.

BNo. If the margin requirements were met when the loan was made, there are no further requirements.

CNo. The bank is only required to ensure that withdrawals do not violate margin requirements; collateral substitutions are not covered.

DNo. In this case the margin requirement must be met only when the loan is renewed.

Suggested Answer: A

Get Premium CRCM Questions as Interactive Web-Based Practice Test or PDF Real Exam Format Detailed Explanations Instant Access Get Your Practice Test

12 comments · newest first

Juan 2 months ago

B makes sense too. If it was fine at the start, why worry later?

Chantell 2 months ago

I lean towards C. Withdrawals matter, but substitutions are tricky.

Marion 2 months ago

I think A is the right answer. Margin requirements should always be met.

Zita 2 months ago

Really? I doubt they can just ignore substitutions like that.

Maryln 2 months ago

Wait, D? That seems risky, how can they only check at renewal?

Matthew 2 months ago

C sounds right, withdrawals are the only concern.

Joye 3 months ago

I disagree, B makes more sense if they were met initially.

Kenneth 3 months ago

A) Yes. The margin requirements must be met at all times.

Amie 3 months ago

D seems a bit off to me; I thought margin requirements were ongoing, not just at renewal. But I could be mixing it up with other regulations.

Christiane 3 months ago

I feel like C could be right since it mentions that the bank only needs to ensure withdrawals don't violate requirements, but I'm not completely confident.

Erasmo 3 months ago

I'm not entirely sure, but I remember a practice question that suggested the bank only needs to check at the start of the loan. Maybe it's B?

Shad 4 months ago

I think the answer is A because margin requirements should always be maintained, especially with frequent trading.

American Bankers Association CRCM Exam - Topic 4 Question 128 Discussion