A:

A. None

B. $1,000

C. $1,500

D. $2,000


Correct answer: D

Explanation: The account is in restriction since the equity is less than 50% of the market value. [MV – DR = EQ --$18,000 - $10,000 = $8,000]. 50% of $18,000 = $9,000. The account is in restriction by $1,000. The SMA may be used so long as it does not push the EQ below the 25% maintenance level.

RELATED FAQS
  1. Use the following information about a customer’s margin account to answer the question.

    ABC stock – 200 shares. CMV $40/share PDQ stock – 100 shares. CMV $30/share LIB stock – 100 shares. CMV $50/ share Debit ... Read Answer >>
  2. How is a simple moving average calculated?

    Learn about the simple moving average, how the indicators are used, and how to calculate a stock's simple moving average ... Read Answer >>
  3. Given the below information, all of the following statements are FALSE regarding ...

    $150,000 long market value$(100,000) debit balance$50,000 credit balance$5,000 SMANo short interest at present Reg T margin ... Read Answer >>
  4. What are restricted shares?

    Understand what a restricted share is. Learn why a company would issue restricted shares to employees and why an employee ... Read Answer >>
  5. What is the difference between a simple moving average and an exponential moving ...

    The only difference between these two types of moving average is the sensitivity each one shows to changes in the data used ... Read Answer >>
Related Articles
  1. Investing

    PTC Therapeutics $20M Milestone on Horizon (PTCT)

    PTC Therapeutics initiated a Phase 2 study for its RG7916 drug to treat Type 2 and Type 3 Spinal Muscular Atrophy (SMA) in children and adults.
  2. Investing

    Cytokinetics SMA Drug Did Well in Early Study

    Cytokinetics' spinal muscular atrophy drug, CK-2127107, improved muscle function in a pre-clinical study.
  3. Insights

    Biogen Gets Competition for SMA Therapy (BIIB)

    The newly listed company can offer strong competition to Biogen and Ionis for SMA therapy.
  4. Investing

    The P/E Ratio: A Good Market-Timing Indicator

    Check out the returns this newer technical analysis tool would've yielded over the period from 1920 to 2003.
  5. Trading

    Solving Mixed Options Problems On The Series 7

    Learn to ace the questions that involve both options contracts and stock positions.
  6. Investing

    What Does Debit Mean?

    Debit is an accounting term used to refer to the left side of an accounting journal entry. Each debit must be offset by an equal credit entry.
  7. Investing

    What is Restricted Cash?

    Restricted cash is cash that’s not available for a company to use immediately. It’s earmarked for some specific purpose.
  8. Investing

    Biogen’s Spinraza Faces Insurance Coverage Hurdles

    Spinraza sales may remain limited as the costly drug is facing restricted insurance coverage.
  9. Personal Finance

    What is an Account Balance?

    An account balance represents the total amount of money in a financial account at any given moment.
RELATED TERMS
  1. Special Memorandum Account - SMA

    A special account where excess margin generated from a client's ...
  2. Free Credit Balance

    The cash held by a broker in a customer's margin account that ...
  3. STARC Bands

    A type of technical indicator that is created by plotting two ...
  4. Restricted Market

    A market which does not allow for a free-floating exchange rate, ...
  5. Restricted Fund

    A reserve of money that can only be used for specific purposes. ...
  6. Account Activity

    A banking term that refers to any activity that creates a debit ...
Hot Definitions
  1. Leveraged Buyout - LBO

    The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. ...
  2. Current Assets

    A balance sheet account that represents the value of all assets that can reasonably expected to be converted into cash within ...
  3. Tax Liability

    The total amount of tax that an entity is legally obligated to pay to an authority as the result of the occurrence of a taxable ...
  4. Preferred Stock

    A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares ...
  5. Net Profit Margin

    Net Margin is the ratio of net profits to revenues for a company or business segment - typically expressed as a percentage ...
  6. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
Trading Center