Final answer:
LMV refers to the total value of the securities in a margin account, the DR is the amount borrowed to purchase these securities, and EQ is the ownership interest after deducting any outstanding debts, as illustrated in the examples of Fred, Freda, and Frank and their house equities.
Step-by-step explanation:
Understanding LMV, DR, and EQ
Long Market Value (LMV) refers to the total market value of all the securities held in a margin account. In the given example, assets include reserves of $30, bonds of $50, and loans of $50, but these do not contribute directly to the LMV unless securities are part of the assets.
Debit Balance (DR) represents the amount borrowed from a broker to purchase securities, typically in a margin account. This could relate to the liabilities in the given balance sheet, like the deposits of $300, if we assume that part of these deposits are used to lend money to purchase securities on margin.
Equity (EQ) in finance generally refers to the ownership interest in a company or property. According to the examples provided:
Fred's house has a market value of $200,000 with a bank debt of $180,000, making his equity $20,000.
Freda's house is valued at $250,000 with no debt, giving her entire equity as $250,000.
Frank's house is worth $160,000, he owes $60,000 to the bank, resulting in an equity of $100,000.
For the given balance sheet, equity is listed as $30, which implies the residual interest in the assets of the company after subtracting liabilities.