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FINRA Series 7 General Securities Representative Exam

3. Provides Information, Makes Recommendations, Transfers Assets / Margin: practice questions

Our FINRA Series 7 bank has 20 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.

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Question 1

A long margin account has a market value of $50,000 and a debit balance of $30,000. The account is:

  1. Restricted, with equity below the Reg T 50% requirement
  2. Holding excess equity of $5,000 above Reg T
  3. Below FINRA's 25% maintenance requirement
  4. Holding exactly the Reg T requirement
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A. Restricted, with equity below the Reg T 50% requirement — Equity = $20,000, which is 40% of market value: below 50% Reg T (restricted) but above 25% maintenance.

Question 2

A long margin account has a debit balance of $15,000. At what market value will a FINRA maintenance call be triggered?

  1. Below $20,000
  2. Below $18,750
  3. Below $30,000
  4. Below $15,000
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A. Below $20,000 — Minimum maintenance for long positions is 25% of market value; the call point = debit / 0.75 = $15,000 / 0.75 = $20,000 (Rule 4210(c)).

Question 3

A customer sells short $20,000 of stock in a new margin account. What is the credit balance after the Reg T deposit is made?

  1. $30,000
  2. $10,000
  3. $20,000
  4. $40,000
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A. $30,000 — Credit balance = short sale proceeds ($20,000) + Reg T deposit (50% = $10,000) = $30,000.

Question 4

A long margin account has $5,000 of SMA. What is its buying power for marginable stock?

  1. $2,500
  2. $20,000
  3. $10,000
  4. $5,000
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C. $10,000 — At 50% Reg T margin, SMA supports purchases of twice its amount: $5,000 / 0.5 = $10,000.

Question 5

A customer opens a new margin account and buys $1,600 of stock. The required deposit is:

  1. $800
  2. $2,000
  3. $1,600
  4. $400
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C. $1,600 — FINRA's $2,000 minimum does not require depositing more than the cost of the purchase, so the customer pays 100% ($1,600).

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