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Exam CRCM topic 1 question 118 discussion

Actual exam question from ABA's CRCM
Question #: 118
Topic #: 1
[All CRCM Questions]

For which of the following must a bank obtain Form FR U-1 when a loan is in excess of $100,000?

  • A. A loan made to purchase margin stock
  • B. A loan secured by margin stock
  • C. A loan made to purchase margin stock and secured by margin stock
  • D. A loan secured by stock (either margin or nonmargin)
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Suggested Answer: B 🗳️

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Cam22
4 months ago
Selected Answer: C
Form FR U-1, known as the Purpose Statement, is required under Regulation U for certain types of credit extensions that involve margin stock. Regulation U applies to credit extended by lenders (including banks) for the purpose of buying or carrying margin securities if the loan is secured directly or indirectly by those securities. The purpose of Form FR U-1 is to disclose the purpose of the loan and whether it is for buying or carrying margin securities.
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