Finra Series-7 Exam - Topic 4 Question 49 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 49
Topic #: 4

[All Series-7 Questions]

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?

A$500

B$20,000

C$20,500

D$37,000

Show Suggested Answer

Suggested Answer: B

$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.

by An at May 09, 2022, 04:25 AM

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Nilsa

7 months ago

I thought it would be lower, but $20,500 seems correct.

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Nydia

7 months ago

Wait, how does SMA factor into this?

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Dorothy

7 months ago

Definitely agree with that, $20,500 makes sense!

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Providencia

7 months ago

I think it's $20,500, right?

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Avery

8 months ago

Equity is calculated as credit balance minus short market value.

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Silva

8 months 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?

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Ernestine

8 months 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?

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Pamella

8 months 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.

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Nu

8 months 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.

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Kate

8 months ago

This question seems straightforward, I think I can handle it.

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Tayna

8 months ago

I should have paid more attention to the SSH configuration part; C seems off, but I can't remember what's right.

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