Margin Flashcards
Margin Learning (5 cards)
1
Q
Brokerage customers who sign a margin agreement can generally borrow up to how much of new marginable investments?
A
50%
2
Q
if you had $5,000 cash in a margin-approved brokerage account, you could buy up to this amount of marginable stock
A
$10,000
3
Q
What is buying power?
A
Total amount you can deploy using margin
4
Q
If you have $5000 worth of stock, you can purchase another how much worth of stock? How does the borrowed split for collateral?
A
$5000. The stock you own provides collateral for the first $2500 and the newly purchased marginable stock provides collateral for the 2nd $2500.
5
Q
If you buy $5000 in stock and $5000 in margin, how much is equity position? And what is equity ratio?
A
$10,000 - $5000 margin debt = $5000. equity ratio is 50%
