Margin Accounts
A customer has a long margin account with a market value of $40,000 and a debit balance of $15,000. What is the customer's equity?
Long margin equity = Long Market Value - Debit Balance. Equity = $40,000 - $15,000 = $25,000. The equity represents the customer's ownership stake after subtracting what is owed to the broker.
Complete Analysis & Legal Rationale
Long margin equity = Long Market Value - Debit Balance. Equity = $40,000 - $15,000 = $25,000. The equity represents the customer's ownership stake after subtracting what is owed to the broker.
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:
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing securities rule described in the explanation.
Official Standard: Federal Reserve Regulation T margin/credit rules for broker-dealers (verify current text).
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.