Question

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

A. $750.
B. $1,500.
C. $2,000.
D. $3,000.

Answer 1

Answer: $2,000

Step-by-step explanation:

Regulation T which governs such actions in the investment market would only require that the customer deposit 50% of the total amount to be called which would be;

= 50% * (100 * 17)

= $850

However, as this is a new margin account, there is a set minimum that must be reached to enable it to be open. That minimum is $2,000.