Dominate the Series 26 in 2025 – Master the Investment & Variable Contracts Challenge!

Question: 1 / 400

According to the Securities Exchange Act of 1934, for how many days are new shares prohibited from being purchased on margin?

10 days

20 days

30 days

The correct answer is based on the regulations established under the Securities Exchange Act of 1934, which mandates that newly issued shares cannot be purchased on margin for a specific period. The prohibition lasts for 30 days after the shares have been issued. This rule is in place to stabilize the initial trading of new securities and ensure that new investors do not engage in leveraged purchases until a more established market price has been determined. This period allows the stock to trade freely without the added risk that comes from purchasing on margin, which could lead to higher volatility and potential market manipulation. Thus, the 30-day margin restriction serves important regulatory and investor protection purposes in the securities market.

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60 days

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