Portfolio Margin Quiz

What is the primary purpose of portfolio margin?

• To reduce trading fees

• To align margin requirements with portfolio risk

• To eliminate the need for collateral

• To simplify trading for beginners

Who is portfolio margin intended for?

• Retirees

• Beginner traders

• Advanced traders

• Casual investors

How are margin requirements calculated in a portfolio margin account?

• Using a fixed percentage of the trade value

• Based on historical price data

• Using theoretical pricing models

• By averaging the last five trades

What is a potential benefit of lower margin requirements in portfolio margin accounts?

• Guaranteed profits

• Reduced trading hours

• Elimination of trading fees

• Increased leverage

In a short strangle example, what is the margin requirement based on?

• The number of trades

• The total account balance

• The maximum theoretical loss

• The average stock price

What is required to apply for portfolio margin approval?

• At least $125,000 in equity

• At least $50,000 in equity

• A perfect credit score

• A minimum of 10 years of trading experience

How are concentration risk calls handled in portfolio margin accounts?

• They are automatically adjusted by the system

• They must be addressed the same day

• They can be ignored

• They are resolved within a week

What is the portfolio-wide vega limit in portfolio margin accounts?

• 10% of the account value

• 15% of the account value

• 12.5% of the account value

• 20% of the account value

What happens if the cash balance exceeds the 15:1 ratio in a portfolio margin account?

• The account is closed

• The account is liquidated

• The account receives a warning

• The account is restricted to closing-only transactions

What is a key difference between portfolio margin and standard margin accounts?

• Portfolio margin eliminates all risk

• Portfolio margin is only for stock trades

• Portfolio margin requires less margin capital per dollar traded

• Portfolio margin has higher fees