ABC stock – 200 shares. CMV $40/share
PDQ stock – 100 shares. CMV $30/share
LIB stock – 100 shares. CMV $50/ share
Debit balance -- $6,400
If this customer used any SMA in the account to its maximum by purchasing stock, the DR balance in the account would be:
correct answer is b.
Any time an investor uses SMA, he/she is borrowing money from the broker-dealer and increasing the DR balance. SMA has a purchasing power equaling the SMA x 2 ($1,600 x 2 = $3,200). The broker-dealer will loan the client an additional $3,200 to purchase stock. Add this to the existing DR balance of $6,400 + $3,200 = $9,600.
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The correct answer is b. Under these circumstances, the broker-dealer is not required to register with the state and the ...
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