Margin calculations

FINRA FINRA SIE
1

Based on WWC7K-746M and X7VR8-RMJWF

For WWC7K-746M, the answer was $700 which must be fully deposited instead of $2,000.

But for X7VR8-RMJWF, the answer was $2,000 instead of $1600.

Why is that?

I am confused by the logic. Did I miss something?

I understand it must be greater than 50% initial deposit or $2,000 for the margin account.

Thanks!

PS: I wish I could go back in these previous questions so I can see the difference in question style being asked.

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2

Hi @FoxMcCloud,

The difference in the questions is buying vs. short selling. Here are some similar examples to illustrate the difference:

Buying 100 ABC @ $15 in a margin account

If the stock value sinks greatly, the maximum amount of risk is the purchase amount of $1,500 (100 x $15). Since the risk is limited, the $2,000 minimum doesn’t apply.

Short selling 100 ABC @ $15 in a margin account

If the stock value rises greatly, the maximum amount of risk is unlimited, so the minimum of $2,000 in account equity does apply.

We are working on a feature to allow you to directly share/save a specific instance of a question, hoping to launch it early in the new year!

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3

Thank you! This totally made sense now!

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