For stocks trading below $5, what is the minimum maintenance per share?

For stocks trading below $5, what is the minimum maintenance per share?

• A. $1.50
• B. $2.50 per share
• C. $5 per share
• D. $3 per share

Answer: (B)

For stocks trading below $5, the minimum maintenance requirement is indeed $2.50 per share. This rule is set by the Financial Industry Regulatory Authority (FINRA) to protect both investors and the brokerage firms against excessive losses in low-priced securities. Maintenance margin refers to the minimum amount of equity that must be maintained in a margin account, and for stocks priced below $5, this specific amount helps ensure that there is sufficient collateral to back the borrowed funds used to purchase the stock. This requirement is particularly important in volatile markets where low-priced stocks may experience significant price fluctuations. In this context, the other choices do not align with the standard maintenance requirements set by FINRA for low-priced stocks. Hence, the correct answer reflects the regulatory guidelines to maintain a level of financial security in margin trading.

For stocks trading below $5, the minimum maintenance requirement is indeed $2.50 per share. This rule is set by the Financial Industry Regulatory Authority (FINRA) to protect both investors and the brokerage firms against excessive losses in low-priced securities. Maintenance margin refers to the minimum amount of equity that must be maintained in a margin account, and for stocks priced below $5, this specific amount helps ensure that there is sufficient collateral to back the borrowed funds used to purchase the stock. This requirement is particularly important in volatile markets where low-priced stocks may experience significant price fluctuations.

In this context, the other choices do not align with the standard maintenance requirements set by FINRA for low-priced stocks. Hence, the correct answer reflects the regulatory guidelines to maintain a level of financial security in margin trading.