Review Quiz
- 1. Samantha Stewart recently signed a margin agreement with her broker. What is the maximum amount of money she can borrow when she purchases a security on margin?
- A. 25% of the security’s value
- B. 35% of the security’s value
- C. 50% of the security’s value
- D. depends on the stipulated terms of credit in the margin agreement
- 2. Which of the following is a customer NOT asked to sign when opening a margin account?
- A. assignment agreement
- B. loan consent
- C. hypothecation agreement
- D. credit agreement
- 3. According to FINRA, what is the minimum maintenance requirement on long positions?
- A. 25%
- B. 30%
- C. 10%
- D. none of these choices
- 4. The term CLOSEST to the contents of a Special Memorandum Account in a margin account is:
- A. excess equity
- B. margin maintenance requirement
- C. debit balance
- D. credit balance
- 5. Sam London bought 1,000 shares of XYZ Corporation three months ago and the stock has appreciated significantly over that time. Sam decides to go short against the box. What does this mean?
- A. Sam has decided to short 1,000 shares of XYZ.
- B. Sam has decided to write 10 call options of XYZ stock.
- C. Sam has decided to write 10 put options of XYZ stock.
- D. Sam has decided to sell his shares of XYZ and then buy the shares back after a 30-day window.
- 6. The FINRA definition of a “pattern day trader” is:
- A. a customer who executes ten or more day trades within two business days
- B. a customer