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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?

Show Suggested Answer Hide 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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Hillary
2 months ago
I'm just going to buy more KKK stocks - that ticker is clearly the key to success here. Who needs to worry about Regulation T when you've got the triple Ks on your side?
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Berry
2 months ago
I'm going with B) $1,500. It's just basic math - Bubba needs to have 50% of the total $30,000 market value in his account, which is $15,000. He already has $12,000, so he needs to deposit $3,000 to meet the requirement. Since he's buying $3,000 worth of DUM, he only needs to deposit $1,500 to make the trade.
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Isaiah
2 months ago
D) $0 seems like the right answer to me. Bubba's net equity is already $18,000, which is more than enough to cover the 50% Regulation T requirement for the new $3,000 purchase. He doesn't need to deposit any additional funds.
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Alaine
19 days ago
D) $0
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Xuan
1 months ago
C) $2,000
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Art
1 months ago
B) $1,500
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Justa
2 months ago
A) $3,000
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Quiana
3 months ago
I'm going with C) $2,000. Bubba's net equity is $18,000, and he needs to deposit enough to cover the 50% Regulation T requirement for the new $3,000 purchase. That means he needs to deposit $1,500 for the new shares, plus any additional funds to bring his account back up to the 50% requirement.
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Giuseppe
1 months ago
That makes sense, he needs to maintain the 50% requirement for Regulation T.
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Bette
1 months ago
So, Bubba needs to deposit $2,000 to cover the purchase of the new shares.
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Maryann
2 months ago
I think you're right, C) $2,000 sounds like the correct answer.
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Shawnna
3 months ago
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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Tien
3 months ago
I'm not sure, but I think the answer is C) $2,000 because the total market value is $30,000.
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Armando
3 months ago
I agree with Timothy, because Bubba needs to deposit 50% of the purchase price.
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Timothy
4 months ago
I think the answer is A) $3,000.
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