In an existing margin account with special memorandum account (sma) of $2,000, if a customer wishes to buy 300 shares of abc at $20 per share, how much must the customer deposit?

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The customer wishes to purchase $6,000 worth of stock, and the Regulation T requirement is $3,000. The SMA has buying power of 2:1 when Regulation T is 50%, so $2,000 of SMA will purchase $4,000 of stock. Of the remaining $2,000 balance, the broker will lend 50%, so the customer must deposit $1,000.

A special memorandum account (SMA) is a devoted funding account where excess margin generated from a purchaser's margin account is held. An SMA equates to the buying power stability or extra fairness in a margin account, which is cash an investor has to buy securities.

SMA will only decrease when securities are bought or cash withdrawn and the handiest restriction with recognize to its use is that the additional purchases or withdrawals do no longer bring the account beneath the preservation margin requirement.

Memorandum Account means an account set up by the Committee in the call and for the advantage of a participant, to file accruals of cash and/or inventory or stock devices below the Plan that continue to be situation to time restrictions.

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