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Nadusha1986 [10]
1 year ago
7

In a new margin account, a customer sells short $60,000 worth of ABC stock and deposits $30,000 to meet the Regulation T require

ment. If the value of ABC falls to $55,000, the special memorandum account (SMA) balance in the account would be
Business
1 answer:
Sidana [21]1 year ago
5 0

The SMA balance in the account would be 7500.

<h3>What is Special Memorandum Account (SMA)?</h3>

The excess margin from a client's margin account is put into a special memorandum account (SMA), which is a dedicated investment account, improving the client's purchasing power. The SMA, which is often referred to as a "special miscellaneous account," functions effectively as a line of credit.

It's important to distinguish between separately managed accounts, often known as SMAs, and special memorandum accounts.

A short account's market value decreases by $1 for every $1 of SMA to be created. The SMA balance would be $7,500 if the market value decreases by $5,000.

To learn more about SMA visit:

brainly.com/question/17189709

#SPJ4

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