Question

"The customer deposits the required margin. Subsequently, ABC stock rises to $40; DEF rises to $50; and PDQ rises to $60. The new equity in the account is:

Answer 1

Answer:

$18,500

Explanation:

for computing the new equity in the account first we have to determine the starting equity which is shown below:

Initial one is

Long Market Value - Debit = Equity %

= $25,000 - $12,500 (50%)

= $12,500

Now the new equity is

The 4,000 in the ABC stock, the $15,000 in DEF stock and $12,000 in PDQ stock after increased in the market values

So, the new equity is

= $31,000 - $12,500

= $18,500