According to Regulation T, what is the minimum margin requirement for the purchase of securities?

According to Regulation T, what is the minimum margin requirement for the purchase of securities?

• A. 30%
• B. 40%
• C. 50%
• D. 60%

Answer: (C)

Regulation T, established by the Federal Reserve Board, sets out the minimum margin requirements for the purchase of securities on credit. Under Regulation T, the minimum margin requirement for most securities is set at 50%. This means that an investor must initially provide at least 50% of the purchase price in cash or marginable securities, while the remaining 50% can be borrowed from a brokerage firm. This regulation is designed to ensure that investors have a meaningful stake in the investment, which aligns their interests with those of the broker and promotes responsible borrowing. Understanding this requirement is important for anyone involved in securities trading, as it helps in managing risk and ensuring compliance with regulatory standards.

Regulation T, established by the Federal Reserve Board, sets out the minimum margin requirements for the purchase of securities on credit. Under Regulation T, the minimum margin requirement for most securities is set at 50%. This means that an investor must initially provide at least 50% of the purchase price in cash or marginable securities, while the remaining 50% can be borrowed from a brokerage firm.

This regulation is designed to ensure that investors have a meaningful stake in the investment, which aligns their interests with those of the broker and promotes responsible borrowing. Understanding this requirement is important for anyone involved in securities trading, as it helps in managing risk and ensuring compliance with regulatory standards.