A margin account has a long market value of $12,000, a debit balance of -$6,000 ...

By Investopedia Staff AAA
Q:
A 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 50%?
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
A:
Answer:
The 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 at $6,000.
III is incorrect since the Reg T requirement is $7,200.
IV is correct since: ($14,400/2) - $6,000 = $1,200.
 

RELATED FAQS

  1. A _______ is a person on the trading floor of certain exchanges who holds an inventory ...

    The correct answer is d. A good example of an exchange using the specialist system is the NYSE. Each stock listed on the ...
  2. At the beginning of the year, OPQ Corp. began to lease a building using the capitalized ...

    The correct answer is: c) Step 1: Calculate the Present Value of the lease: PMT = $12,000; N = 7; I = 7.5%*
  3. You are currently reviewing the following information for JKL Corp ...

    Free info on financial certification exams including study guides, exam questions, and much more!
  4. A portfolio hedge is purchased in the form of a spread ...

    Free info on financial certification exams including study guides, exam questions, and much more!
RELATED TERMS
  1. Series 79

    A examination to ensure a candidate is qualified to become a ...
  2. Research Analyst

    A person who prepares investigative reports on equity securities. ...
  3. Series 34

    An exam required for individuals seeking to engage in off-exchange ...
  4. Financial Advisor

    One who provides financial advice or guidance to customers for ...
  5. Series 23

    An exam offered by the Financial Industry Regulatory Authority ...
  6. Series 28

    An exam given by the Financial Industry Regulatory Authority ...

You May Also Like

Related Articles
  1. Insurance

    Municipal Bond Tips For The Series 7 ...

  2. Retirement

    6 Proven Tips For Series 6 Success

  3. Insurance

    Tips For Passing The Series 6 Exam

  4. Professionals

    Banker Or Broker: Which Career Is Right ...

  5. Professionals

    Breaking Down Financial Securities Licenses

Trading Center