SIE Understanding Trading, Customer Accounts and Prohibited Activities Question 67: Answer and Explanation

Question: 67

Which of the following statements is true regarding the Federal Reserve Board Regulation T?

• A. Short sales must be made in a cash account.
• B. Margin purchases must be made in a cash account.
• C. Payments are made promptly, not later than T+2, for securities purchased from a margin account.
• D. Repayment of the borrowed part of a margin purchase from a cash account must be made promptly, not later than T+1.

Correct Answer: C

Explanation:

C: Choice C is correct because Regulation T assures that payments will be made on a timely basis. Choices A, B, and D are incorrect because short sales and margin purchases must be made from a margin account.