SIE (Securities Industry Essentials) Practice Exam

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Under Reg T, what is the required initial margin percentage in the account when the account is first established?

50%
25%
75%
100%

The correct answer is: 50%

The required initial margin percentage in the account when the account is first established is 50%. This means that investors must provide at least 50% of the total purchase price of a security, while the remaining 50% can be borrowed from the broker. Option B, 25%, is incorrect because it is too low and would result in more borrowing and potential risk for the investor. Option C, 75%, is also incorrect because it is too high and would require the investor to use more of their own funds and have less leverage. Option D, 100%, is incorrect because it is not possible for investors to fully fund their trades with their own capital. Overall, Reg T requires an initial margin percentage of 50% in order to balance the use of leverage and potential risk for investors.