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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
Bubba wants to buy 100 shares of DUM at $30 per share and 100 shares of OUT at $120. How much additional money must be deposited?
Suggested Answer: C
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$4,500. The purchase of DUM will cost $3,000 (100 x $30) and the purchase of OUT will cost $12,000 (100 x $120). Both combined total a cost of $15,000. Reg T requires 50% ($7,500) and Bubba only has $3,000. So he is $4,500 short.
13 comments · newest first
JU
Julio
12 months ago
Totally agree, $6,000 sounds about right!
EL
Elfrieda
1 year ago
Wait, is that right? Seems off to me.
MA
Matthew
1 year ago
I think Bubba needs to deposit $6,000.
AU
Augustine
1 year ago
Gotta love margin rules!
LE
Lenita
1 year ago
Regulation T is indeed 50%.
LE
Leah
1 year ago
I feel like I might be overthinking this. The total cost is $15,000, and with Regulation T, Bubba needs to cover half of that, but I’m not sure how to factor in his current equity.
DO
Donette
1 year ago
If I remember correctly, the total market value of the new shares will impact the required equity. I think we might need to add the cost of DUM and OUT together first.
AN
Annabelle
1 year ago
I think we need to find out how much equity Bubba has after the new purchases. I practiced a similar question, but I can't recall the exact steps for the additional deposit calculation.
VI
Vivienne
1 year ago
I remember something about calculating the total cost of the new shares and then figuring out how much equity is needed. But I'm not sure how to apply the Regulation T requirement here.
RI
Ricarda
1 year ago
Ah, I see now - the key is to choose the three options that allow the Disaster to schedule the Service Appointments while taking the Scheduling Policy into account.
DE
Devorah
1 year ago
I'm leaning towards 25 MB because that sounds familiar, but I might be mixing it up with something else from the study guide.
MA
Marg
1 year ago
Could be an access issue too - maybe the user permissions aren't set up correctly. Option B seems possible.
AM
Amber
1 year ago
Ah, I remember learning about this in class. The Ethereum Blockchain uses a Merkle Patricia Trie to store data, which is a modified version of a Radix Trie. So the correct answer is option B.