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Bubba has a short margin account with a short market value of $22,000, a credit balance of $42,000, and SMA of $500.
What is the equity in Bubba's account?
Suggested Answer: B
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$20,000. The equity in a short margin account is equal to the credit balance minus the short market value. SMA is not considered when computing equity.
11 comments · newest first
NI
Nilsa
1 year ago
I thought it would be lower, but $20,500 seems correct.
NY
Nydia
1 year ago
Wait, how does SMA factor into this?
DO
Dorothy
1 year ago
Definitely agree with that, $20,500 makes sense!
PR
Providencia
1 year ago
I think it's $20,500, right?
AV
Avery
1 year ago
Equity is calculated as credit balance minus short market value.
SI
Silva
1 year ago
I’m a bit confused about how to incorporate the SMA into the equity calculation. Does it add to the total or is it separate?
ER
Ernestine
1 year ago
I remember a practice question where we had to find equity in a margin account, and I think it was similar to this one. Could it be $20,500?
PA
Pamella
1 year ago
I think the equity is calculated by subtracting the short market value from the credit balance, but I'm not entirely sure how the SMA factors in.
NU
Nu
1 year ago
I feel like the answer might be $20,000, but I’m not confident. I wish I had reviewed more margin account examples before the exam.
KA
Kate
1 year ago
This question seems straightforward, I think I can handle it.
TA
Tayna
1 year ago
I should have paid more attention to the SSH configuration part; C seems off, but I can't remember what's right.