According to CIRO rules, what is the maximum loan value for a margin account holding a long position in an eligible Canadian equity trading at $4 per share?

Question: According to CIRO rules, what is the maximum loan value for a margin account holding a long position in an eligible Canadian equity trading at $4 per share?

Answer options:

• 50% of the market value
• 30% of the market value
• 70% of the market value ✅ The loan value would be $2.50 per share.

Correct answer: The loan value would be $2.50 per share.

Explanation: For an eligible Canadian equity trading between $1 and $5, the maximum loan value is 50% of the market value or $2.50 per share, whichever is lower. In this case, 50% of $4 is $2, which is less than $2.50, so the loan value is $2 per share.