For which of the following must a bank obtain Form FR U-1 when a loan is in excess of $100,000?
For which of the following must a bank obtain Form FR U-1 when a loan is in excess of $100,000?
Form FR U-1 is required by Regulation U for loans that are both made to purchase margin stock and secured by margin stock. This form discloses the purpose of the loan and ensures compliance with margin regulations. Therefore, the correct scenario requiring Form FR U-1 would be a loan made to purchase margin stock and secured by margin stock.
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.