Question

A customer buys 100 shares of ABC at $17 as the initial transaction in a new margin account. The customer must deposit:______

Answer 1

$1,700

Step-by-step explanation:

Although the minimum equity to open a long margin account is $2,000. However, this does not apply if the securities in the account are paid fully.

It will amount to potential loss if a customer is asked to deposit more than 100% when buying. Since the customer wants to buy 1,700 of stock, it means that 100% or $1,700 (100 shares × $17) must be deposited.