Margin Account Formulas

Question 1

• What is the Initial Investment Minimum for a Long Margin?
• What is the Main?
• What is the Long Margin Equity Formula?

Answer 1

Initial Investment Minimum: 50%
Main: 25%

Equity Formula:
Long Market Value (LMV) - Debit = Equity

Question 2

• What is the Initial Investment Minimum for a Short Margin?
• What is the Main?
• What is the Short Maket Value Formula?

Answer 2

Initial Investment Minimum: 50%
Main: 30%

• Short Market Value (SMV) = Equity

Question 3

If this is on a margin account it is like a hidden credit line that builds up from your account’s excess equity (unrealized gains or deposited cash) and automatically increases your buying power, letting you trade more without depositing new funds; think of it as a credit card that raises your limit when you’ve consistently shown financial strength.

What Special Type of Margin Account is this?

Answer 3

Special Memorandum Account (SMA)

Question 4

Example:

When your investments grow, the excess value goes into the SMA, effectively giving you extra leverage or funds for new purchases, while dividends and certain cash deposits also feed into it.

What Special Type of Margin Account is this?

Answer 4

Special Memorandum Account (SMA)