Short Margin Accounts Flashcards
1
Q
How is equity computed for a short margin account?
A
Credit - Short Market Value = Equity
2
Q
How is SMA computed for a short margin account?
A
Equity - 50% of Market Value = SMA
3
Q
For every 1$ MV decrease how much SMA is created for a short account?
A
$1.50
4
Q
What is the selling power for a short account SMA
A
2x
5
Q
What is a formula to establish when a maintenance call will be put out for a short account?
A
Credit/1.3 (assuming a 30% maintenance margin)
6
Q
Is any interest charge a short account?
A
No, credit balances are not charged interest
