Series 7 Exam Question 222: Answer and Explanation

Question: 222

Which type of margin account requires a minimum equity of $25,000?

• A. A portfolio margin account
• B. A short account
• C. A day-trading account
• D. A corporate account

Correct Answer: C

Explanation:

C. A day-trading account requires an initial margin of $25,000, and the investor must keep $25,000 minimum equity in the account to keep trading. A portfolio margin account is relatively new and looks at the risk of the portfolio as a whole to determine the margin requirement. Only certain investors are able to take advantage of portfolio margin because it requires a certain degree of sophistication and a minimum equity of around $150,000.