Your client has a short margin account. The SMV is $16,100 and the credit balance is $18,600. How much excess equity does your client have in the account?

Explanations

Remember the formula; SMV + EQ = CR. $16,100 + EQ = $18,600. $2,500 is the equity. However, the question asks for the Excess Equity. The short market value is $16,100. With Reg T at 50%, your client needs at least $8,050 in equity. Since she only has $2,500 in equity, there is no excess equity and the account is restricted by $5,550