Series 7 Exam Question 377: Answer and Explanation

Question: 377

One of the advantages of portfolio margin is that it allows

• A. smaller investors the opportunity to purchase securities on margin
• B. less sophisticated investors a chance to purchase securities on margin
• C. investors to avoid maintenance calls
• D. investors greater leverage

Correct Answer: D

Explanation:

D. Portfolio margin looks at the risk of an investor's portfolio as a whole when determining margin requirements. Portfolio margin allows investors greater leverage but is only available to more sophisticated investors, and those investors must keep a minimum equity in their account of around $100,000 to $150,000.