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Excess Equity in Margin

Dashboard > Chapter 10: Trading on Margin > Excess Equity in Margin

Excess Equity in Margin

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    Quizlet

    How to Handle Excess Equity in a Margin Account

    One term that comes up on The Seven all the time is SMA, or Special Memorandum Account. This is a line of credit in a margin account that an investor can use to purchase even more securities on margin.

    In a long margin account, SMA is created when the price of the stock rises. The amount of SMA is equal to the amount over and above the margin requirement for the account. Confused? Let's work an example.

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