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FINRA Series 7 / SIE Exams Series 7: Customer Accounts, Suitability, and Margin Flashcards
50 question-and-answer cards covering Series 7: Customer Accounts, Suitability, and Margin as it is examined in FINRA Series 7 / SIE Exams. 24 of them are printed below, taken from across the deck — no signup, no paywall on the preview.
24 sample cards from the Series 7: Customer Accounts, Suitability, and Margin deck
Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.
What does Regulation T require for the initial margin deposit on a stock purchase, and what is the current percentage?
Reg T (set by the Federal Reserve) requires an initial margin deposit of 50% of the purchase price of marginable securities.
What is the FINRA minimum equity requirement to open a long margin account, and what is the minimum maintenance margin for a long account?
Minimum to open: $2,000 (or 100% if the purchase is less than $2,000). Minimum maintenance margin: 25% of the long market value (LMV).
What documents make up a margin (credit) account agreement?
The credit agreement (terms/interest), the hypothecation agreement (pledging securities as collateral), and the optional loan consent agreement (allowing the firm to lend out the customer's securities).
What is the formula for equity in a long margin account?
Equity = Long Market Value (LMV) − Debit Balance (DR). The debit balance is the amount borrowed and stays constant; equity changes as market value changes.
In a long margin account, what is Special Memorandum Account (SMA) and how is it created?
SMA is a line of credit representing excess equity above the 50% Reg T requirement. It is created when LMV rises (equity exceeds 50% of LMV); SMA does not decrease when market value falls.
How do you calculate excess equity / SMA in a long margin account?
SMA = Equity − (50% × LMV). Excess equity above the Reg T initial requirement becomes SMA, usable as buying power.
What is the buying power of $1 of SMA in a long account at 50% Reg T?
$1 of SMA provides $2 of buying power (SMA ÷ Reg T rate = SMA ÷ 0.50 = 2 × SMA).
At what long market value does a long margin account reach the 25% maintenance level? Give the formula.
Maintenance is reached when LMV = Debit Balance ÷ 0.75 (i.e., LMV × 0.25 = equity). At that point equity equals exactly 25% of LMV.
What is a margin maintenance call (house/Reg T call) and what must the customer do?
A demand for additional funds when equity falls below the maintenance requirement. The customer must deposit cash or marginable securities to restore the required equity, typically within the firm's stated deadline.
What is a Regulation T (federal) call versus a maintenance call?
A Reg T call is the initial 50% deposit due on a new purchase (payment due in 2 business days, T+2, with extensions possible). A maintenance call occurs later when existing equity drops below the 25%/30% maintenance minimum.
What is the minimum equity to open a SHORT margin account and the minimum maintenance margin for short positions?
Minimum to open a short account: $2,000. Minimum maintenance margin for shorts: 30% of the short market value (SMV).
How is equity calculated in a short margin account?
Equity = Credit Balance (CR) − Short Market Value (SMV). The credit balance (sale proceeds + Reg T margin) stays constant; equity rises as SMV falls and falls as SMV rises.
At what short market value does a short margin account hit the 30% maintenance requirement? Give the formula.
Maintenance is reached when SMV = Credit Balance ÷ 1.30. At that point equity equals 30% of the short market value.
What special maintenance rule applies to short positions in low-priced stocks?
For stocks priced under $5, maintenance is the greater of $2.50 per share or 100% of market value; for stocks $5 and above, the greater of $5 per share or 30% of market value.
What is the holding period that distinguishes a short-term from a long-term capital gain, and why does it matter?
Held one year or less = short-term (taxed at ordinary income rates); held more than one year = long-term (taxed at preferential rates of 0%, 15%, or 20%).
How are capital gains and losses netted for tax purposes?
Short-term gains/losses are netted together and long-term gains/losses are netted together; then the two are netted against each other to produce a net short-term or net long-term result.
What is the maximum net capital loss an individual may deduct against ordinary income per year, and what happens to the excess?
Up to $3,000 of net capital losses may be deducted against ordinary income per year; any excess is carried forward indefinitely to future tax years.
What is the wash sale rule?
A capital loss is disallowed if the investor buys the same or a substantially identical security within 30 days before or after the sale (a 61-day window). The disallowed loss is added to the cost basis of the replacement shares.
How are qualified dividends taxed versus non-qualified (ordinary) dividends?
Qualified dividends are taxed at long-term capital gains rates (0/15/20%) if the holding-period requirement is met; non-qualified dividends are taxed at ordinary income rates.
How is interest from municipal bonds, Treasury securities, and corporate bonds taxed at the federal and state levels?
Municipal bond interest: federally tax-exempt (often state-exempt if in-state). Treasury interest: federally taxable but state/local exempt. Corporate bond interest: fully taxable at federal, state, and local levels.
What is the difference in tax treatment between a Traditional IRA and a Roth IRA?
Traditional IRA: contributions may be tax-deductible, growth is tax-deferred, withdrawals are taxed as ordinary income. Roth IRA: contributions are after-tax (non-deductible), growth and qualified withdrawals are tax-free.
What is the age for required minimum distributions (RMDs) and the penalty for not taking them, for a Traditional IRA?
RMDs must begin by April 1 of the year after turning 73 (under SECURE Act 2.0). Failing to take the RMD triggers a penalty of 25% (reduced to 10% if corrected timely) of the shortfall. Roth IRAs have no RMDs during the owner's lifetime.
What is the penalty for early (pre-59½) withdrawals from a Traditional IRA, and name two exceptions.
A 10% early-withdrawal penalty plus ordinary income tax. Exceptions include first-time home purchase (up to $10,000), qualified higher-education expenses, death, disability, and certain medical expenses.
Compare a Coverdell ESA and a 529 plan for education savings.
Coverdell ESA: limited annual contribution ($2,000/year), income limits, usable for K-12 and college, must be used by age 30. 529 plan: high contribution limits, no income limits, state-sponsored, tax-free growth for qualified education expenses, donor retains control.
What this deck covers
The Series 7: Customer Accounts, Suitability, and Margin deck follows the FINRA Series 7 / SIE Exams Series 7: Customer Accounts, Suitability, and Margin syllabus — 4 chapters and 12 topics — so questions land on material that is genuinely examinable rather than trivia around it. That works out to roughly 12.5 cards per chapter.
Answers are written to be recallable, not just readable — averaging about 174 characters, which is long enough to carry the reasoning and short enough to say out loud.
A deck like this earns its keep on the second and third pass. Read the syllabus first so you know the shape of the subject, then use the cards to find the specific facts that have not stuck.
Series 7: Customer Accounts, Suitability, and Margin flashcards FAQ
How many Series 7: Customer Accounts, Suitability, and Margin flashcards are in this FINRA Series 7 / SIE Exams deck?
50 cards. This page previews 24 of them, sampled evenly across the deck so you can judge the difficulty before installing anything.
Are these FINRA Series 7 / SIE Exams flashcards free?
Yes. The preview here is free to read with no signup, and the full 50-card deck is free inside the Examius app.
What do the Series 7: Customer Accounts, Suitability, and Margin cards cover?
They follow the FINRA Series 7 / SIE Exams Series 7: Customer Accounts, Suitability, and Margin syllabus — 4 chapters and 12 topics — so the questions track what is actually examinable.
How should I use these flashcards?
Read the syllabus first so you know the shape of the subject, then drill the deck. Examius schedules each card with spaced repetition, so cards you keep missing come back sooner and ones you know drift further apart.