Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
15 Cards in this Set
- Front
- Back
|
How do you compute the Equity in a long margin account?
|
Equity (EQ)=long market value (LMV) - debit balance (DR)
|
|
|
As the market value of a security fluctuates, what happens to the debit balance?
|
It remains constant.
|
|
|
Regulation T covers what?
|
Margin Accounts
|
|
|
What is the debit balance?
|
The amount owed to the brokerage firm.
|
|
|
What are the initial requirements for margin accounts?
|
Reg T: 50% for both long sales & short purchases.
NYSE & NASDAQ House Rules: Long Position= $2000 or 100% of the purchase price, whichever is less. Short Position: $2000 or the Reg T deposit, whichever is greater. |
|
|
What is the minimum maintenance requirment for a long position?
|
Equity must be 25% of the current market value of the securities in the account.
|
|
|
In addition to increased market value, what generates SMA?
|
1. Cash dividend on stock owned in the account.
2. Interest on bonds owned in the account. 3. Voluntary cash deposits made by the customer. 4. Proceeds from sale of securities in the account. |
|
|
What is the minimum maintainance requirement for a short position?
|
Equity must not fall below 30% of the current market value of the securities in the account.
|
|
|
What creates excess equity in a short account?
|
If the market value of the security decreases.
|
|
|
In a short account, how far can the market value increase and still be at the Minimum Equity Level?
|
10/13 X Credit Balance = MEL
|
|
|
How do you compute Equity in a short margin account?
|
Equity = Credit Balance - Market Value.
|
|
|
How do you compute equity in a combined Long and Short Account?
|
Long Market Value+
Credit Balance- Debit Balance- Short Market Value= Equity |
|
|
What are the margin requirments for convertible and non-convertible bonds?
|
Convertible= 50% of the Mkt Value
Non-Convertible= 20% of the Mkt Value or 7% of the principal amount, whichever is greater. |
|
|
What is the margin requirement for Municipal Securities?
|
7% if the Market Value.
|
|
|
What is the margin requirement for U.S. Government securities?
|
Between 1% & 6% of the market value depending on maturity. This is both initial and maintainance.
|
