Series 7 practice questionmediumMargin Accounts — Short Margin
A client sells short 1,000 shares at $30 per share, depositing the Reg T requirement. What is the credit balance?
- A$15,000
- B$30,000
- C$45,000✓ Correct answer
- D$60,000
Explanation
Why C — $45,000
Short sale proceeds = 1,000 x $30 = $30,000. Reg T deposit = 50% x $30,000 = $15,000. Credit balance = Short sale proceeds + Reg T deposit = $30,000 + $15,000 = $45,000. The credit balance remains constant (unlike long accounts where the debit balance is fixed). Equity = Credit balance - Market value = $45,000 - $30,000 = $15,000 (50%).
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