How do I calculate minimum margin account value if maintenance margin is still met?

The formula to calculate the minimum margin account value where the maintenance margin is still met is as follows. Margin Account Value = Margin Loan / (1 – Maintenance Margin) We’ll now move to a modeling exercise, which you can access by filling out the form below.

What is a Maintenance Margin Call?

So if an investor has $10,000 worth of equity in their margin account, they must maintain a minimum amount of $2,500 in the margin account. If the value of their equity increases to $15,000, then the maintenance margin also rises to $3,750. The investor is hit with a margin call if the value of securities falls below the maintenance margin.

What is the FINRA maintenance margin?

The initial margin required by FINRA is currently $2,000 in cash or securities. After a trader starts buying on margin, they must meet the maintenance margin on their account — at least 25% of the market value of the securities in their account. A maintenance margin is a monetary buffer for traders with margin accounts.

How do you calculate a margin call?

If the brokerage’s maintenance margin is 25%, the formula for calculating the account balance that triggers the margin call is as follows: Margin Account Value = ($12,000 Margin Loan) / (1 – 0.25 Maintenance Margin %) So if the investor’s margin account dips below $16,000, they would receive a margin call.