If an investor uses the full amount of margin available, the equity in a margin account used for a share purchase can be found as ________.

Question

Quizplus · Accepted Answer

The equity in a margin account used for a share purchase is equal to the market value of the share minus the amount owed on the margin loan. This is because the market value of the share represents the total value of the investment, while the amount owed on the margin loan represents the amount borrowed to make the investment. The difference between the two represents the investor's equity in the investment.

If an Investor Uses the Full Amount of Margin Available