$150,000 long market value
$(100,000) debit balance
$50,000 credit balance
$5,000 SMA

No short interest at present Reg T margin requirements:
50% initial
25% maintenance

A. The owner of the account can expect a margin call.

If the account owner wanted to buy $10,000 in stock, she would be able to do so only after depositing $5,000 in cash or $10,000 in securities.

The equity in the account exceeds the margin requirement.

The SMA funds cannot be withdrawn until the margin requirement is met.

Correct answer: C
The account is not below the maintenance margin requirement; there is enough cash in the SMA that the investor need not deposit additional funds.

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  1. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin ...
  2. Equity

    Equity is the value of an asset less the value of all liabilities ...
  3. Debt/Equity Ratio

    Debt/Equity Ratio is debt ratio used to measure a company's financial ...
  4. Marginable

    Definition of "marginable."
  5. Borrowing Power Of Securities

    The value associated with being able to invest in securities ...
  6. Open Trade Equity (OTE)

    Open trade equity (OTE) is the equity in an open futures contract.

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