Series 4 Question of the Week

An investor has a margin account as follows. Regulation T is 50%.

Long 100 XYZ @ 80\tab Debit Balance $11,700

Long 100 PDQ @ 100\tab SMA -0-

He sells 20 shares of PDQ for $2,000. The SMA can be credited with:

A. $0

B. $1,000

C. $500

D. $2,000

Correct Answer(s):

B. $1,000

Explanation:

The investor’s account is restricted however 50% of all sale proceeds must be credited to SMA.