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Svet_ta [14]
3 years ago
14

In a new margin account, a customer buys 1,000 shares of ABC stock at $40 per share. The stock rises to $50 during the next week

and subsequently declines to $39. If there are no other transactions in the account, the current SMA balance would be:A. 0
B. $2,500
C. $5,000
D. $10,000
Business
1 answer:
Helen [10]3 years ago
4 0

Answer:

C) $5,000

Explanation:

Since the price of the stocks first rose to $50, the account's equity was $50,000.

The SMA balance was = ($50,000 x 1/2) - $20,000 = $,5000

The SMA balance acts like a stabilizer and cannot be taken away even if the price of the stocks fall slightly. The price of stocks must fall 25% in order for the SMA to be withdrawn.

The investor's equity decreased = equity - margin requirement = $39,000 - $20,000 = $19,000, but the amount that the investor can borrow (SMA balance) will remain the same at $5,000.

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Answer:

The best option is a.

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Explanation:

7 0
3 years ago
g The Ricardian equivalence states that if the government cuts taxes without changing current or future expenditure then: a) hou
Aleks [24]

Answer:

b) households will save more because they will expect higher taxes in the future

Explanation:

The Ricardian Equivalence proposition is one of the pillars of classical economics, which sadly has proven to not work very well in the real world. According to classical economists, and their quantity theory of money plus the Ricardian Equivalence, recessions do not exist because it is impossible for them to exist. But in the real world, that is not true. Recessions exist, e.g. the US is in a recession since the first quarter of 2020 (even before the current health crisis). When real people lose their jobs or are afraid to lose their jobs, their spending habits change.

On the other hand, when real people get a tax refund or tax cut, they generally spend it, they will not save it to pay future taxes. That is why car sales increase during February after checks form the IRS are handed out.

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4 0
3 years ago
Nadiya, your classmate, is struggling to keep up with class. Last week, she told you that she even thought about cheating on a t
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Answer:

fundamental attribution error.

Explanation:

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The Professor makes this "fundamental attribution error" by failing to consider Nadiya's situation; meaning the situational information was insufficiently taken into account before reaching a conclusion (Probably Nadiya is under emotional distresse maybe she's grieving the death of her Farther).

3 0
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Opportunity cost refers to the benefits that one gives up in order to enjoy another benefit, that is, the benefit that is sacrificed.
In this question, two benefits are given up, but the real opportunity cost is the one that have the highest value, which is the $15.
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Lubov Fominskaja [6]

Answer:

A

Explanation:

In the accounting process extracting a trial balance is the final step.

8 0
2 years ago
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