A client purchases 2,000 shares of XYZ at $25 per share on margin. The stock rises to $35. How much can the client withdraw from the account without triggering a margin call?

Why B — $10,000

Initial purchase: 2,000 x $25 = $50,000. Reg T deposit: 50% x $50,000 = $25,000. Debit balance: $25,000. At $35: MV = 2,000 x $35 = $70,000. Equity = $70,000 - $25,000 = $45,000. Reg T requirement = 50% x $70,000 = $35,000. SMA = $45,000 - $35,000 = $10,000. The client can withdraw the $10,000 SMA (which would increase the debit to $35,000, keeping equity at $35,000 = 50% of MV).