margin account has a long market value of $12,000,
a debit balance of -$6,000 and a credit balance of
$6,000. Which is/are TRUE about the this margin account
if the share price of the stock purchased should
appreciate 20% and the Reg T margin requirement is
I. Long market value is $14,400.
II. Debit balance is $7,200.
III. Reg T requirement is $6,000.
IV. Excess equity is $1,200.
a) I and IV
b) I only
c) I, II, III and IV
d) I, II and IV
correct answer is a.
I is correct since the stock's currently
valued at $12,000 are increasing 20% or $2,400.
II is incorrect because the debit balance remains
III is incorrect since the Reg T requirement is $7,200.
IV is correct since: ($14,400/2) - $6,000 = $1,200.