Question

Long Market Value: $48,000 Short Market Value: $18,000 Debit: $25,000 Credit: $25,000 SMA: $3,000 Interest charges on the account are based on a balance of:____.A. 0.B. $3,000.C. $25,000.D. $50,000.

Answer 1

Answer:

C. $25,000

Explanation:

The interest charges on the account(margin) are based on the debit balance in the account. Also, credits that came as a result of short sales are usually not matched off against debits in the account, hence interest charges is based on the $25,000 debit balance.