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. 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 ...
  3. Customer account records of NFA members must be kept for ...

    Free info on financial certification exams including study guides, exam questions, and much more!
  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. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  2. Life Insurance

    A protection against the loss of income that would result if the insured passed away. The named beneficiary receives the ...
  3. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  4. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  5. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center