Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Study for the Series 26 exam with flashcards and multiple choice questions. Each question includes hints and detailed explanations to help you understand and master the material needed to pass your exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

For mutual funds to be used as collateral in a margin account, they must be held fully paid for a minimum of how many days?

10 days
30 days
60 days
90 days

The correct answer is: 30 days

Mutual funds must be held fully paid for a minimum of 30 days before they can be used as collateral in a margin account. This requirement is put in place to ensure that the mutual fund shares have established a history of stability and valuation. By holding the mutual fund shares for this period, there is a decreased risk associated with their volatility, which is important for a secured loan against the margin account. This 30-day rule helps protect both the broker and the investor by mitigating the risks of using an asset that may have fluctuated significantly in value shortly after purchase.