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39 Cards in this Set

  • Front
  • Back
If a decline in the market value of a security puts the equity below $2000, the client is required to pay in cash to meet the minimum. True/False
Margin accounts are never ____, only cash accounts.
The loan value is the difference between the Current Market Value and ___
the Equity
Purchases of new securities in a restricted margin account are treated in what way?
The same as a purchase in a non-restricted account, with the same Reg T margin call.
Due to the high degree of risk, Selling Short is only permitted in a ____ _____.
margin account
When there is both buying and selling of securities in one day with a restricted account they determine the ____ _____ or ____ at the end of the _____.
Net purchase; sale; day
Excess equity is ____.
the unused increase in the equity of the margin account created by an increase in current market value.
An account that is below the NYSE/NASD minimum maintenance requirement is called __________.
A client may not withdraw money or securities from his account if what two conditions would occur?
1. The equity in the account would fall below $2,000.
2. The equity would fall below the minimum maintenance requirements.
When a customer sells holdings in a restricted margin account, the Retention Rule says the stockbroker must do what?
Retain 50% of the proceeds to reduce the client's debit balance.
The credit balance in a Short Margin account is a _____.
If a client fails to meet the margin call, what happens?
The firm is required to sell off securities in the amount of twice the margin call.
A customers Margin Call is the _____ he puts in the transaction.
If a customer feels his reasons are exceptional for not paying for his stock on a Regular Way Trade, he can ask for ______.
a 2 day extension.
What is Debit Balance?
The amount of the loan to finance the purchase of marginable securities.
To quickly determine how far the minimum market value may drop without incurring a maintenance call, multiply the ____ ___ by ____.
debit balance; 4/3
Marking To The Market means what?
A clients securities in his margin account are updated daily to that day's close.
A brokerage firm _____ a client's securities in order to obtain financing from a bank for part of the margin purchase. The maximum amount of securities pledged can be no greater than ____ of the clients' debt.
Rehypothecates; 140%
The NYSE/NASD stipulates that no credit may be extended to any client unless they have a minimum ____ equity.
Dividends and interest received in a Restricted account are automatically ____ ___ of the account in into the ____ ____ on the day received.
journaled out; SMA Account
If the credit balance in a short margin account is a constant, what does change with market fluctuations?
1. The cost of buying back the borrowed property to cover the short sale.
2. The equity in the account.
What is the Minimum Maintenance Requirement?
A client is required to keep equity of at least 25% of the market value of the stock.
Use of the SMA as a source of equity in another short sale is called _____ ____.
shorting power
In a cash account Reg T allows how much time to pay in full after the trade date if no extension is granted.
5 business days.
A client must maintain an equity in a short margin account of the greater of the following.
1. 30% of the CMV
2. $2,000
3. The Cheap Stock Rules.
Regulation T requires the broker/dealer to cancel ____ if _____ is not made on time.
the trade; payment
The margin call for a short sale is ___ for a long purchase.
the same
What is Street Name Registration?
In order for a broker to be able to liquidate the loan collateral quickly, the securities are registered in the name of the brokerage firm or its nominee.
The maximum potential loss on a short sale is _____.
The client whose securities are registered in Street Name, remains the actual owner of ___, and he is referred to as the ___ ____.
all benefits of ownership;

Beneficial Owner.
The minimum maintenance equity in a short margin account is ______.
30% of CMV
A margin account is also referred to as a ____ ____.
General Account
Any margin account with equity below Reg T is considered _______.
Determining the Buying Power from the SMA amount is best remembered by the acronym SMART which means what?
SMA account x Reg T = Buying Power.
Cheap Stock Rules Require what equity per share?

0 to $2.50 : ______
$2.50 to $5: ______
$5 per share+: _____
$2.50 per share;
100% of share price;
$5 per share.
The consequences for a customer who violates Reg T are?
His trades will be cancelled or the unpaid portion will be liquidated and his cash account will be frozen for the next 90 days.
What is a Restricted Margin Account?
One where a decline in the market value of the stock has caused the owners equity to fall below the Reg T percentage.
Hypothecation is what?
Pledging the securities as collateral for a margin loan.
What is it called when a brokerage firm mixes or combines its own securities with those of clients to obtain loans and other benefits beyond what is fair and reasonable.