Series 7 Exam Question 50: Answer and Explanation

Question: 50

Declan K. would like to open a margin account by selling short 200 shares of OOOP common stock at $7 per share. What is the margin call?

• A. $700
• B. $1,400
• C. $2,000
• D. Cannot be determined

Correct Answer: C

Explanation:

C. When an investor is opening a margin account by selling short, the investor must deposit $2,000 or Regulation T (usually 50%) or the dollar value of the securities being sold short, whichever is greater. In this case, Declan is only shorting $1,400 (200 shares × $7 per share), so he must deposit $2,000.