For which of the following must a bank obtain Form FR U-1 when a loan is in excess of $100,000?
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A. B. C. D.B
Form FR U-1 is a document required by the Federal Reserve Board under Regulation U. This form is used to disclose information regarding a borrower's intended use of credit for purchasing or carrying margin stock. The form is used to ensure compliance with Regulation U, which is designed to limit the amount of credit that can be extended for the purchase or carrying of securities.
In response to the question, the correct answer is A. A loan made to purchase margin stock.
According to Regulation U, if a bank extends credit to a borrower for the purpose of purchasing margin stock (i.e., securities that can be purchased using borrowed funds), the bank must obtain Form FR U-1 if the loan amount is in excess of $100,000.
Option B, a loan secured by margin stock, does not require Form FR U-1. However, the bank would be subject to other regulatory requirements, such as margin requirements under Regulation T.
Option C, a loan made to purchase margin stock and secured by margin stock, would also require Form FR U-1 because the loan is being used for the purchase of margin stock.
Option D, a loan secured by stock (either margin or nonmargin), would not require Form FR U-1 if the loan is not being used to purchase margin stock. However, if the loan is being used to purchase margin stock, then Form FR U-1 would be required if the loan amount is in excess of $100,000.
In summary, banks are required to obtain Form FR U-1 when extending credit in excess of $100,000 for the purpose of purchasing margin stock, regardless of whether the loan is secured by margin stock or not.