Question

A client's mixed margin account has the following positions:

Long, 100 XYZ with a current market value of 5,000
Long, 300 ABC with a current market value of 16,000
Short, 200 DEF with a current market value of 10,000
Short, 100 GHI with a current market value of 8,000

The account has a debit balance of 8,000 and a credit balance of 22,000. What is the combined equity in the account?

Answer 1

The combined equity in the margin account, considering long and short positions, debit and credit balances, is $17,000.

Step-by-step explanation:

The question pertains to determining the combined equity in a mixed margin account with various long and short positions.

To calculate the combined equity of the account, you need to consider the market value of the long and short positions, as well as the debit and credit balances in the account.

Combined equity is calculated with the following formula:

• Equity = Market Value of Long Positions - Market Value of Short Positions - Debit Balance + Credit Balance

In this case, the combined equity is calculated as follows:

• Equity = ($5,000 for XYZ + $16,000 for ABC) - ($10,000 for DEF + $8,000 for GHI) - $8,000 (Debit Balance) + $22,000 (Credit Balance)
• Equity = $21,000 - $18,000 - $8,000 + $22,000
• Equity = $17,000

Therefore, the combined equity in the account is $17,000.