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Business, 19.04.2021 16:20 AllyArce

A margin account with a short credit balance of $39,000 will receive a call for additional funds if the SMV rises above A) $40,000. B) $10,000. C) $30,000. D) $20,000. Explanation When the price of a stock sold short rises, the account loses money. As a certain point, the margin maintenance level is reached. Once the stock rises above that point, a maintenance call will be issued demanding more money. With the maintenance call, the investor has to return the account to the margin maintenance requirement (30% of CMV here). Dividing the credit balance by 1.30 will give the call level: $39,000 divided by 1.30 equals $30,000.

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