Margin

# Margin Accounts > Exam weight context (sourced from FINRA 2025 Series 7 outline): Margin falls within Function 3 (Provide Clients with Investment Recommendations and Strategies), which accounts for 73% / 91 of the 125 scored questions — the dominant function on the exam. Key rules cited directly in the 2025 outline: Regulation T (Federal Reserve Board); FINRA Rule 4210 (Margin Requirements); FINRA Rules 2270 and 2130 (Pattern Day Trader account requirements and approval). Know every threshold cold. --- ## What Is Margin? Margin is borrowing money from a broker-dealer to purchase securities. Instead of paying 100% of a security's purchase price, you pay a portion (your equity) and borrow the rest from the firm. Your securities serve as collateral for the loan. Real-world analogy: Buying on margin is like buying a house with a mortgage. You put 20% down (your equity) and the bank finances the remaining 80% (the loan). You own the house but owe the bank. If the house rises in value, your return on your equity investment is amplified. If it falls, you can lose more than your down payment. Margin amplifies both gains and losses — it is a double-edged sword. --- ## Regulation T: Initial Margin Requirement Regulation T (Reg T), issued by the Federal Reserve Board under authority of the Securities Exchange Act of 1934, sets the initial margin requirement for purchasing equity securities. Regulation T is explicitly cited in the FINRA 2025 Series 7 Content Outline as a governing rule under Function 3. Reg T initial margin = 50% This means you must deposit…