A:

ABC stock – 200 shares.
CMV \$40/share PDQ stock – 100 shares.
CMV \$30/share LIB stock – 100 shares.
CMV \$50/ share
Debit balance -- \$6,400

If this customer used any SMA in the account to its maximum by purchasing stock, the DR balance in the account would be:

A) \$12,800
B) \$9,600
C) \$8,000
D) \$3,200

Any time an investor uses SMA, he/she is borrowing money from the broker-dealer and increasing the DR balance. SMA has a purchasing power equaling the SMA x 2 (\$1,600 x 2 = \$3,200). The broker-dealer will loan the client an additional \$3,200 to purchase stock. Add this to the existing DR balance of \$6,400 + \$3,200 = \$9,600.

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