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.

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