Long Margin Maintenance Call Trigger Formula (Debit ÷ 0.75)
An investor has a long margin account with a Debit Balance of $18,000. At what Long Market Value (LMV) will the account receive a minimum maintenance call?
To find the exact market value at which a long account triggers a maintenance call: Market Value = Debit Balance ÷ 0.75. $18,000 ÷ 0.75 = $24,000.
Complete Analysis & Legal Rationale
At an LMV of $24,000 and DR of $18,000, Equity = $6,000. $6,000 ÷ $24,000 = exactly 25.0%. Any drop below $24,000 pushes equity below 25%, triggering a maintenance call.
Mathematical Step-by-Step Derivation
- Step 1: Formula: Critical LMV = Debit Balance ÷ 0.75
- Step 2: $18,000 ÷ 0.75 = $24,000.
- Step 3: Verification: $24,000 - $18,000 = $6,000 (which is 25% of $24,000).
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
$18,000 ÷ 0.75 = $24,000 exact maintenance trigger.
Divides by 0.80 instead of 0.75.
Multiplies by 2 (initial Reg T level).
Multiplies by 1.50.