Q:
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

A:

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.


RELATED FAQS

  1. A brokerage customer has $10,000 in securities and a credit balance of $4,000 ... ...

    The correct answer is d The market value of the person's equity is equal to the market value of the securities plus the credit ...
  2. Customer account records of NFA members must be kept for ...

    Free info on financial certification exams including study guides, exam questions, and much more!
  3. What are the minimum margin requirements for a short sale account?

    In a short sale transaction, the investor borrows shares and sells them on the market in the hope that the share price will ...
  4. What does it mean when the shares in my account have been liquidated?

    An account liquidation occurs when the holdings of an account are sold off by the firm in which the account was created. ...
  5. Committing acts against the Commodity Exchange Act can result in fines up to ... ...

    Free info on financial certification exams including study guides, exam questions, and much more!
  6. How is buying on margin regulated by the Securities and Exchange Commission (SEC)?

    Learn how FINRA and the Federal Reserve regulate margin account trading, and understand how pattern day trading can impact ...
RELATED TERMS
  1. Free Credit Balance

    The cash held by a broker in a customer's margin account that ...
  2. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin ...
  3. Minimum Balance

    The minimum dollar amount that a customer must have in an account ...
  4. House Maintenance Requirement

    The minimum amount of equity that an account holder must maintain ...
  5. Remargining

    The process of bringing an account up to minimum equity standards ...
  6. Account Balance

    1. The amount of money in a financial repository, such as a checking ...
Hot Definitions
  1. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  2. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  3. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  4. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  5. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  6. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
Trading Center