A:

A. None

B. $1,000

C. $1,500

D. $2,000


Correct answer: D

Explanation: The account is in restriction since the equity is less than 50% of the market value. [MV – DR = EQ --$18,000 - $10,000 = $8,000]. 50% of $18,000 = $9,000. The account is in restriction by $1,000. The SMA may be used so long as it does not push the EQ below the 25% maintenance level.

RELATED FAQS
  1. Why is the 200 Simple Moving Average (SMA) so common for traders and analysts?

    Learn about the 200 simple moving average (SMA), how it is utilized by traders and analysts, and why it is considered to ... Read Answer >>
  2. Use the following information about a customer’s margin account to answer the question.

    ABC stock – 200 shares. CMV $40/share PDQ stock – 100 shares. CMV $30/share LIB stock – 100 shares. CMV $50/ share Debit ... Read Answer >>
  3. Given the below information, all of the following statements are FALSE regarding ...

    $150,000 long market value$(100,000) debit balance$50,000 credit balance$5,000 SMANo short interest at present Reg T margin ... Read Answer >>
  4. What is the difference between a simple moving average and an exponential moving ...

    The only difference between these two types of moving average is the sensitivity each one shows to changes in the data used ... Read Answer >>
  5. What is the Exponential Moving Average (EMA) formula and how is the EMA calculated?

    Learn the formula for calculating both simple moving averages and exponential moving averages, indicators that are frequently ... Read Answer >>
Related Articles
  1. Trading

    Forex: The Moving Average MACD Combo

    Learn a strategy with clear entry and exit levels that will get you into a trend at the right time.
  2. Investing

    AveXis Reports Positive Data for SMA Gene Therapy

    AveXis' spinal muscular atrophy drug, AVXS-101, reported encouraging results from a Phase 1 trial.
  3. Insights

    Biogen Gets Competition for SMA Therapy (BIIB)

    The newly listed company can offer strong competition to Biogen and Ionis for SMA therapy.
  4. Investing

    The P/E Ratio: A Good Market-Timing Indicator

    Check out the returns this newer technical analysis tool would've yielded over the period from 1920 to 2003.
  5. Trading

    Solving Mixed Options Problems On The Series 7

    Learn to ace the questions that involve both options contracts and stock positions.
  6. Investing

    What Does Debit Mean?

    Debit is an accounting term used to refer to the left side of an accounting journal entry. Each debit must be offset by an equal credit entry.
  7. Investing

    CDC vs. DLN: Comparing Dividend-Oriented ETFs

    Take a look at an overview and comparison of two dividend-oriented ETFs to learn the respective advantages and disadvantages of each fund.
  8. Personal Finance

    What is an Account Balance?

    An account balance represents the total amount of money in a financial account at any given moment.
  9. Small Business

    How Restricted Stocks and RSUs Are Taxed

    Many firms pay a portion of their employees’ compensation in the form of restricted stock or restricted stock units.
  10. Investing

    DR Horton Earnings Coming Up, What to Expect? (DHI)

    There's strong pent up demand for DR Horton-built homes, which will likely translate to a higher stock price in the quarters ahead.
RELATED TERMS
  1. Restricted Stock

    Insider holdings that are under some other kind of sales restriction. ...
  2. STARC Bands

    A type of technical indicator that is created by plotting two ...
  3. Account Activity

    A banking term that refers to any activity that creates a debit ...
  4. Debit

    An accounting entry that results in either an increase in assets ...
  5. Debit Balance

    In a margin account, money owed by the customer to the broker ...
  6. Account Balance

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

    A bank account held in a foreign country by a domestic bank, denominated in the currency of that country. Nostro accounts ...
  2. Retirement Planning

    Retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve ...
  3. Drawdown

    The peak-to-trough decline during a specific record period of an investment, fund or commodity. A drawdown is usually quoted ...
  4. Inverse Transaction

    A transaction that can cancel out a forward contract that has the same value date.
  5. Redemption

    The return of an investor's principal in a fixed income security, such as a preferred stock or bond; or the sale of units ...
  6. Solvency

    The ability of a company to meet its long-term financial obligations. Solvency is essential to staying in business, but a ...
Trading Center