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Zorluk: ZorMargin Accounts and Borrowing Requirements

An investor purchases 300300 shares of a marginable stock at $60\$60 per share in a newly opened margin account and satisfies the Regulation T initial margin requirement with cash. Assuming no subsequent trades or interest charges, what is the minimum market value in dollars to which the position can fall before triggering a FINRA maintenance margin call?

Cevap: 12000 USD

Cevap

The minimum long market value before a maintenance margin call is triggered is $12,000.
Under FINRA Rule 4210, the minimum maintenance requirement for a long margin account is 25% of the current market value. When buying 18,000ofstock,theinvestordeposits18,000 of stock, the investor deposits 9,000 (50%) and borrows 9,000(debitbalance).Settingaccountequityequaltothe259,000 (debit balance). Setting account equity equal to the 25% requirement gives the formula: LMV - Debit = 0.25 x LMV, which simplifies to 0.75 x LMV = Debit. Dividing the 9,000 debit balance by 0.75 yields 12,000.Ifthemarketvaluedropsbelow12,000. If the market value drops below 12,000, equity falls below 25%, triggering a maintenance call.

Adım Adım Çözüm

1
Determine the initial Long Market Value (LMV) and the resulting Debit Balance after the Regulation T cash deposit.
Initial LMV = 18,000(18,000 ( 60 x 300 shares); Required cash deposit = 9,000(509,000 (50%); Debit Balance = 9,000.
Regulation T mandates that the customer fund 50% of the initial stock purchase, leaving the remaining 50% as a borrowed debit balance.
2
Set up the minimum maintenance margin equation under FINRA rules.
Equity = 0.25 x LMV, where Equity = LMV - Debit Balance.
FINRA Rule 4210 establishes that maintenance margin equity in a long account must equal at least 25% of the total current market value.
3
Substitute the debit balance into the equity formula and isolate LMV.
LMV - 9,000=0.25xLMV=>0.75xLMV=9,000 = 0.25 x LMV => 0.75 x LMV = 9,000.
Because the debit balance remains fixed at $9,000, any decline in market value reduces equity dollar-for-dollar until equity drops to 25% of LMV.
4
Solve for LMV to find the critical price threshold.
LMV = 9,000/0.75=9,000 / 0.75 = 12,000.
Dividing the debit balance by 0.75 calculates the exact long market value at which equity equals 25% of the account value.

Anahtar Kavram

Minimum Maintenance Margin Level for Long Positions (Debit Balance / 0.75)
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Konular

Margin Accounts and Borrowing Requirements