A customer has an existing margin account that shows the following:

Long market value: $100,000

Debit balance $60,000

If the market value declines to $60,000, the customer will receive a maintenance call for:

A. $5000

B. $10,000

C. $15,000

D. $20,000

The answer is option C

Explanation:

Long Market Value - Debit = Equity %

$100,000 $60,000 $40,000 40%

If the market value declines to $60,000, the account will now show:

Long Market Value - Debit = Equity %

$60,000 - $60,000 = $0 (0%)

Minimum margin is 25% of market value, i. e 25% of $60,000 = $15,000.

Therefore the customer will receive a maintenance call for $15,000.