Bubba's margin account has $1,000 of SMA. If he buys $20,000 of listed securities, how much fully paid margin stock must he deposit to respond to a Reg T requirement of 50%?
A)$20,000
B)$9,000
C)10,000
D)$18,000

Question

Quizplus · Accepted Answer

$18,000. Fully paid marginable stock equal to the value of the purchase satisfies the requirement. Since Bubba's account already has $1,000 of SMA, this comprises buying power of $2,000. Therefore he only needs to deposit the remaining $18,000.

Bubba's Margin Account Has $1,000 of SMA