Margin and Day Trading Rules Quiz

Margin rules come down to a few percentages and one loan that does not shrink when the stock does. Work the call prices and counts here before your broker works them for you.

AI-assisted, reviewed by John James →

Questions: 10
Level: Intermediate
Time: 5 min

Question 1 of 10

1A new margin account holds 12,000 of equity and no positions. Under Regulation T's 50 percent initial requirement, what is the overnight buying power, before any lower broker limits?

A 12,000 B 24,000 C 48,000 D 36,000

2You buy 400 shares at 60.00 in a margin account, putting up 12,000 and borrowing 12,000. At the FINRA 25 percent maintenance minimum, at what share price does a margin call begin?

A 40.00 B 45.00 C 30.00 D 33.33

3Same position: 400 shares bought at 60.00 with a 12,000 loan. Your broker sets a 40 percent house requirement on this stock. Where is the call price now?

A 40.00 B 44.00 C 50.00 D 54.00

4In that account, with a 12,000 loan on 400 shares, the stock closes at 36.00 and the requirement is 25 percent. How much cash would you need to deposit to meet the call?

A 3,600 B 2,400 C 4,800 D 1,200

5Your margin account falls below the maintenance requirement, and the broker's notice gives you a period to deposit funds. What can the broker do before that period ends?

A Nothing, until the stated deadline has passed B Sell positions it chooses, without contacting you first C Sell only the position that caused the shortfall D Sell only after you approve the positions to go

6A margin account with 15,000 of equity makes 1 day trade on Monday, none on Tuesday, 2 on Wednesday and 1 on Thursday, and they exceed 6 percent of its trades. Under FINRA Rule 4210 as currently written, what follows?

A It meets the definition, and under 25,000 new day trades are restricted B Nothing, since four day trades is the most allowed before a flag C Nothing, because the trades were spread across four separate days D It is flagged but can keep day trading with at least 2,000 of equity

7Your margin account has 18,000 of equity and is not flagged as a pattern day trader. How many day trades can you make in a rolling five-business-day window without meeting the FINRA definition?

A None B Four C Three D Five

8You deposit 12,000, borrow 12,000 and buy 400 shares at 60.00. After bad news overnight the stock opens at 25.00 and the broker sells you out at the open. Where does that leave you?

A You lose 12,000 and owe nothing more B Your loss stops at the 40.00 call price C The broker absorbs anything beyond 12,000 D You lose 12,000 and owe the broker 2,000

9You carry a 30,000 margin debit at a hypothetical 9 percent a year, and your broker uses a 360-day count. About how much interest builds up over a 30-day month?

A 225.00 B 2,700.00 C 7.50 D 675.00

10Your broker raises its margin base rate after a Federal Reserve rate move. You borrowed most of your debit balance three months earlier. What generally happens?

A The old rate stays fixed on the money you already borrowed B The new rate generally applies to your whole debit from its effective date C The new rate applies only once your balance crosses a new tier D Nothing changes until you close and reopen the margin loan

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