Series 7 practice questionmediumMargin Accounts 2
A customer buys stock on margin for $5,000 and deposits 50%. If the market value later falls to $4,500, the customer’s equity is:
- A$2,000✓ Correct answer
- B$2,625
- C$2,500
- D$1,125
Explanation
Why A — $2,000
In a long margin account, equity equals market value minus the debit balance. Here, equity is $4,500 - $2,500 = $2,000.
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