Margin Accounts and Long and Short Investments

Margin Accounts and Long and Short Investments
Margin Accounts and Long and Short Investments
1. An investor has a margin account with a long value of $50,000 and
a debit balance of $30,000. If the investor sells 100 shares of a stock
in the account at 10, how much money can he or she withdraw from
the account?
(A) $1,000 1 0iwWhance Sirs Sid
(B) $500 60, cw — 42,000 <0 00,
(C) $250 2 5de
(D) $0 loo Svar? € lo – 19
mn with draw half S00
2. Investor A has an SMA of $5,000 in a margin account. What is the
investors buying power in this account?
Jur~ Bei oi : sergeact’ ou (C) $5,000 ae atid (D) $2,500 ee
38 » McGraw-Hill’s 500 Series 7 Exam Questions to Know by Test Day
Questions 153-159 are based on the following information:
Regulation T = 50 percent
A customer’s margin account contains the following securities:
¢ 100 shares Intel trading at $25 per share ee ye gr
* 100 shares Pepsi trading at $60 per share Q)
* 100 shares Exelon trading at $45 per share < 7,
* 100 shares Exxon Mobil trading at $80 per share
Total market value = $21,000
Debit balance = $8,000
ra) ie
19,500 x Loe ore _ i, 5 1B 00? Ss t Z 70?
3. What is the customer’s excess equity in the account?
(A) $13,000
(B) $10,500 (©) $2,500
(D) $0
154, What is the buying power in the account?
(A) $10,500 4, (By $5,000 Gee? eon : (C) $2,500 cast
(D) $1,250
Margin Accounts and Long and Short Investments
5. If the customer wants to buy 100 shares of Chesapeake Energy at $25 per
share, what is the amount of money this investor must{add to the account?
(A) $5,000
(B) $2,500
156. Instead of purchasing shares of Chesapeake Energy, the investor decides
to purchase 100 shares of Chevron at $100 per share. How much money
would the investor have to deposit in the account?
(A) $10,000
(B) $5,000 ( $2,500
(D) $0
Margin Accounts and Long and Short Investments < 39
157. Instead of depositing cash into the account, the investor deposits securities to meet the margin call. What amount of securities must be deposited?
(A) $10,000 (B) $5,000 (©) $2,500
(D) $1,000
158. Ifthe investor decides to deposit cash into the account for question 155,
when is the cash due in the account? un bev Rey Tne Ve kaye
(A) On the next business day after the trade mer STH Dusvese (B) ‘Three days after the trade ant – (©) No later than the fifth business day after the trade
(D) No later than the sixth business day after the trade
159. If the investor does NOT make the cash payments or deposit securities for
the trades in this margin account, which of the following options is open
to the brokerage firm that holds the account?
(A) Restrict the account for 30 days.
(B) Lend the money to the investor.
(C) Puta hold on the account for 90 days.
(©) Liquidate the trades in the account.
(1s0,) If an investor sells short 100 shares of Freeport McMoran at $40 per share
and the stock goes up to $45, how much is the restriction on the account?
(A) $2,250 Kevin
(B) $1,500
( $750
(D) $500
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