Finra Series-7 Exam - Topic 2 Question 62 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 62
Topic #: 2

[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

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?

A$6,000

B$7,000

C$4,500

D$1,500

Show Suggested Answer

Suggested Answer: C

$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.

by Rolande at Dec 06, 2022, 03:21 AM

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Julio

8 months ago

Totally agree, $6,000 sounds about right!

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Elfrieda

8 months ago

Wait, is that right? Seems off to me.

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Matthew

9 months ago

I think Bubba needs to deposit $6,000.

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Augustine

9 months ago

Gotta love margin rules!

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Lenita

9 months ago

Regulation T is indeed 50%.

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Leah

9 months 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.

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Donette

9 months 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.

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Annabelle

9 months 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.

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Vivienne

9 months 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.

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Ricarda

9 months 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.

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Devorah

9 months 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.

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Marg

10 months ago

Could be an access issue too - maybe the user permissions aren't set up correctly. Option B seems possible.

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Amber

10 months 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.

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