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Series 7 Exam For Dummies, Premier Edition with CD, 2nd Edition by Steven M. Rice

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Chapter 9

Borrowing Money and Securities: The Long and Short of Margin Accounts

In This Chapter

arrow Understanding the specifics of margin accounts

arrow Zoning in on the initial margin requirements

arrow Calculating with long margin accounts

arrow Summing up short margin accounts

arrow Reviewing additional topics tested

You don’t necessarily need cold cash to buy securities. Thanks to the wonder of margin accounts, you can borrow money from a broker-dealer to purchase securities or borrow the securities themselves. Margin accounts allow customers to buy more securities from you (as a registered rep) than they otherwise would, thus leading to more money in your pocket (a greater commission). However, margin accounts are not without an additional degree of risk (which a lot of people found out back in 1929). Margin accounts are great if the securities held in the account are going in the right direction but horrible if they aren’t.

In this chapter, I cover the Series 7 exam topics relating to short and long margin ...

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