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Margin Accounts

QuestionAnswer
Long margin accounting equation LMV = DR + EQ - Reg T Req. = EE or LMV - DR = EQ - Reg T Req. = EE
Long margin acct. Buy 100 @ $15 first transaction LMV? Required Deposit? SMA credit? LMV = $1500 Required deposit = $1500 (SMA minimum $2000 or full price of stock<$2000) SMA = $0
Long margin acct. Buy 100 @ $30 first transaction LMV? Required deposit? SMA? LMV = $3000 Required deposit = $2,000 (SMA minimum or full price of stock < $2000) SMA = $0
Long margin acct. Long 100 @ $50 first transaction LMV? Required deposit? SMA? LMV = $5000 Required deposit = $2,500 SMA = 0
Long account excess equity amt credited to SMA For every $1 increase in market value requirement $.50 credited to SMA
SMA borrowing power $1 for $1
SMA buying power $2 for every $1
Long 100 @ $24 established account LMV? Required deposit? SMA? LMV = $2,400 Required deposit = $1,200 SMA = 0
Long margin acct. LMV $15,000. DR balance $7,500 How low can LMV fall before maint. call? DR bal ($7,500) / 1-req. (1 - .25) = $10,000
Short margin Account $15,000 SMV, $7,500 CR - how high can SMV rise before maint. call? CR bal ($7500) / 1+req. (1 + .30) = $5,769
SMA market value/equity increase credit power? $.50 for $1 (SMA increases only if new EE is higher than old SMA limit)
Effect on SMA balance after SALE of securities in a LONG margin account? Recalc EE or 50% of proceeds (if greater)
Effect on SMA balance after cash DEPOSIT in a LONG margin account? Increase by full amt. of deposit credited to SMA
Effect on SMA balance after deposit of marginable securities in a LONG margin account? Increase-50%
Effect on SMA balance after pmt. of div/int in a LONG margin account? 100% credit
Effect on SMA balance after PURCHASE of securities in a LONG margin account? Margin req. is deducted from SMA. If SMA not enough, Reg T call is issued for the balance.
Effect on SMA balance after cash WITHDRAWAL in a LONG margin account? 100% deducted. Remaining equity must not fall below FINRA or house requirement.
Effect on SMA balance after fall of LMV, interest charges, or stock div/split? Nada
Short margin accounting equation? CR = SMV + EQ - Reg. T req. = EE or SMV - CR = EQ - Reg T req. = EE
Short margin acct. Buy 100 @ $15 first transaction SMV? Required Deposit? SMA credit? SMV? $1,500 Required Deposit? $2,000 SMA credit? $0
Short margin acct. Buy 100 @ $30 first transaction SMV? Required Deposit? SMA credit? SMV? $3,000 Required Deposit? $2,000 SMA credit? $0
Short margin acct. Buy 100 @ $50 first transaction SMV? Required Deposit? SMA credit? SMV? $5,000 Required Deposit? $2,500 SMA credit? $0
What happens to SMA amount in a LONG margin account if the stock(s) rise in value?
SHORT margin acct. decrease in SMV. What happens to SMA? For every $1 decrease, $1.50 is credited to SMA
Effect of selling securities in a RESTRICTED account? 50% of proceeds must be used to reduce debt
Created by: Lizherman
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