Question

A customer has a long margin account with no sma. if the market value of the securities rises, sma will increase by:________

Answer 1

A customer has a long margin account with no SMA. if the market value of the securities rises, sma will increase by 50% of the increase in market value.

SMA balances are increased in value by cash deposits in brokerage accounts. The SMA also retains interest and dividend payments from long positions and earnings from closing security positions. Clients can use SMA funds to purchase additional securities for their margin accounts.

The SMA of long-margin accounts decreases when the market value decreases. The long account's SMA volume only decreases as it is used and is not affected by market value declines.

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