Cash & Margin Accounts

Question 0

Equity Formula

Answer 0

Current Market Value (-) Debit Balance = Equity

Question 1

Reg T Requirements for Margin Account SHORT

Answer 1

Minimum equity to open a short account is $2,000, no exceptions!

Maintenance Requirements for Short Sale of low priced stocks.
Either $2,000 or chart below, whichever is greater:

STOCK PRICE DEPOSIT
$0 up to $5 $2.50 per share or 100% of Market value
whichever is greater
$5 up to $17 $5.00 per share
$17 and over Regulation T% (50% of purchase price)

Question 2

Margin Conditions

Answer 2

Debit Balance Account Condition
Debit Balance < Half the Market Value EXCESS EQUITY
Debit Balance > Half the Market Value RESTRICTED
Debit Balance = Half the Market Value AT REGULATION T

Question 3

eg T Initial Requirements for a Margin Account LONG…

Answer 3

Customers must deposit 50% of purchase price OR $2,000, whichever is greater.

EXCEPTION: If the full purchase is less than $2,000, the customer must deposit the full amount of the purchase.

Question 4

NYSE Minimum Maintenance Requirement

Answer 4

Must maintain 25% of the current market value of securities.

Question 5

Formula for Equity in a Short Margin Account

Answer 5

Proceeds of the Short Sale
\+ Reg T deposit
-------------------------------
= Credit Balance
- Current Market Value Short
----------------------------------
 = Equity

Question 6

Formula for how high the market value of a short stock position could rise before the customer receives a minimum maintenance call

Answer 6

Credit Balance

    1. 30