SIE: 8.3.1. Price Increases, Special Memorandum Accounts, And Buying Power

8.3.1.  Price Increases, Special Memorandum Accounts, and Buying Power

When a security that has been bought on margin increases in value, the increased long market value (LMV) in the margin account causes equity to increase by an equivalent amount. When the equity increases above 50% of the LMV, we say that excess equity has