Financial Industry Regulatory Authority (FINRA) Practice Exam 2025 - Free FINRA Practice Questions and Study Guide

In a margin account, when an investor makes a purchase, they can borrow a portion of the funds required to buy the securities, which allows them to leverage their investment. The initial cash deposit required by the investor is generally calculated based on the Regulation T requirement set by the Federal Reserve, which is typically 50% of the purchase price for the initial transaction.

In this case, if the total purchase of common stock is $3,000, the initial cash deposit that an investor would need to make is 50% of that amount, which equals $1,500. Therefore, the investor must deposit $1,500 in cash to cover this initial margin requirement. This enables them to borrow the remaining $1,500 needed to complete the purchase.

The option that indicates a cash deposit of $2,000 suggests that the investor would need to put down more than the Regulation T requirement, which is unnecessary for an initial purchase under standard circumstances.