Question

A client has a Cash Account at a broker-dealer and one week ago was sold out of a position for failure to make prompt payment. The customer has now decided to buy 100 shares of ABC common stock @50. This client will be required to:________.

Answer 1

Full question:

A client has a Cash Account at a broker-dealer and one week ago was sold out of a position for failure to make prompt payment. The customer has now decided to buy 100 shares of ABC common stock 50. This client will be required to

[A] make the required Reg T 50% deposit using regular-way settlement.

[B] make the required payment in full for the purchase using regular-way settlement.

[C] make the required payment in full for the purchase prior to entering the order because the account would be frozen.

[D] wait 90 days prior to entering the order to buy the stock because the account would be frozen.

Answer:

This client will be required to make the required payment in full for the purchase prior to entering the order because the account would be frozen.

Explanation:

If someone has been traded out for failure to make the immediate payment that the record must be halted for 90 days. When a report is prohibited for 90 days the  will keep sufficient cash to reach the entire trade value ere the order to purchase is entered. Since this is a Cash account, they will not be permitted to invest 50% of the acquisition price, as this is just conceded in a margin account.

The record is prohibited so the  would not be entitled to obtain payment practicing a regular way settlement. When a record is prohibited , they must deposit funds ere registering orders to purchase but are not prevented from obtaining purchases.