Question of the Week

A customer has a short margin account. The account has equity of $15,000 and a credit balance of $28,000. What is the current NYSE minimum maintenance equity requirement on this account?

A) $3900
B) $4500
C) $3250
D) $3750


Answer:

The correct answer is a) $3900

The minimum maintenance on short accounts is 30% of the current market value. The credit balance is $28,000. The market value can be found by subtracting the equity ($15,000) from the credit balance ($28,000). This puts the short market value at $13,000. $13,000 times 30% is $3900.

© 2004 American Investment Training, Inc.


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