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Bubba buys $100,000 of US Treasury 10 s of 31 on margin. If the current market price is 92.16, what is Bubba's minimum deposit requirement?
Suggested Answer: B
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$5,500. The NYSE maintenance requirements on obligations of the US treasury vary depending upon the term of the instrument. For 20-year bonds, the requirement is 6% of the market value. Multiplying the market value of $92,500 by 6% equals $5,500.
29 comments · newest first
UN
Una
9 hours ago
Good point! Let’s break it down.
SH
Sharmaine
6 days ago
I think we need to calculate the margin percentage to be sure.
TE
Tegan
11 days ago
What about option D? 25,000 seems excessive for this scenario.
CA
Casie
16 days ago
I agree. Option C seems too much as well.
UN
Una
21 days ago
True, but 5,550 feels too high for a minimum deposit.
SH
Sharmaine
26 days ago
I’m not sure. What if the margin requirement is higher?
TE
Tegan
1 month ago
I’m leaning towards option A. 4,625 seems reasonable for a margin.
CA
Casie
1 month ago
Yeah, I feel like it's testing our understanding of leverage.
UN
Una
1 month ago
This question is tricky! I think it's about margin requirements.
PO
Portia
2 months ago
True, always verify before the exam!
RO
Rocco
2 months ago
Either way, we need to double-check the margin rules.
NY
Nydia
2 months ago
Good point!
TU
Tula
2 months ago
I calculated it based on the market price.
PO
Portia
2 months ago
Makes sense! But I still think A is safer.
RO
Rocco
2 months ago
Margin is usually 5.5% for Treasuries.
NY
Nydia
3 months ago
Why B?
RO
Rocco
3 months ago
I disagree, I lean towards B) $5,550.
TU
Tula
3 months ago
I feel like the answer is A) $4,625.
PO
Portia
3 months ago
I think it's about margin requirements.
NY
Nydia
3 months ago
This question is tricky!
AN
Antonio
3 months ago
Definitely leaning towards A, $4,625 is a solid guess.
GA
Gaynell
4 months ago
Wait, how can it be that low? Sounds off to me.
WE
Weldon
4 months ago
Gotta go with option B, $5,550 seems right.
SH
Shaquana
4 months ago
I think it's actually 10% for margin requirements.
AR
Arletta
4 months ago
Minimum deposit is usually 5% for Treasuries.
CA
Carylon
4 months ago
I thought the minimum deposit was usually 10% of the purchase price, but I need to double-check how that applies to Treasury bonds specifically.
LA
Lashaunda
6 months ago
I feel like the answer might be $5,550, but I can't recall how to calculate the market value correctly.
TH
Thaddeus
6 months ago
I remember practicing a similar question where we had to calculate the margin requirement. I think it was around 5% for bonds, but I could be wrong.
JA
James
6 months ago
I think the minimum deposit requirement is based on the margin percentage, but I'm not sure what that is for Treasury bonds.