"Long Margin Account Market Value: $120,000 Debit Balance: $30,000 The "Buying Power" in this account is:"

The "Buying Power" in this account is $60,000.

Explanation:

Buying Power can be described as the amount of stocks which can be bought without the need to deposit cash.

In a margin account, the buying power is twice the amount of the Separately Managed Account (SMA).

From the question, the market value is $120,000. By regulation, the customer can borrow 50% of the market value. That is;

Amount the customer can borrow = Market value * 50% = $60,000

Since there is a Debit Balance of just $30,000, the additional amount the customer can borrow is as follows:

Additional amount to borrow = Amount the customer can borrow - Debit Balance = $60,000 - $30,000 = $30,000

Since the customer can borrow an additional $30,000 as calculated above, it implies that there is $30,000 of Separately Managed Account (SMA).

Since in a margin account, the buying power is twice the amount of the SMA, it therefore means that the buying power is $60,000. That is;

Buying power = SMA * 2 = $30,000 * 2 = $60,000

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