What is the long market value?
Long market value (LMV) is the term used by investors and brokers to describe the total amount of the value held by the investor currently owns on the brokerage account. As regards shares, this amount is determined by multiplying the amount of shares held by the market price for each particular stock and then by adding all these sums together. LMV is important to brokers because they generally require the investor to have a certain percentage of this value in his account as cash to cover margin. The total investor's capital on the account is calculated by deducting the balance of the debit, which is money borrowed from brokers to buy securities, LMV.
Investors generally have two options in terms of stocks. They can sell shares to other investors, which is also known as short. In contrast, the investor can also buy shares. This position is known as long. The term long market value is derived and describes the value of the value of the papers purchased by the investor.
As an example of how long market value is determined, imagine that the investor has bought shares in two different companies. It has 20 shares in the first company for $ 10 for $ 10 (USD) per share and also has 10 shares in the second company for $ 15 per share. This means that his shares in the first company are worth $ 200, which is $ 10 times, and shares in the second company are worth $ 150 or $ 10 times $ 15. The total LMV for his account would be $ 200 to $ 150, a total of $ 350.
This value is determined every day at the end of trading and rises and decreases because shares are changing prices. Brokers often require the investor to pay a certain percentage of long market value to the account, which is the amount known as the margin. Using the above example, if the broker demanded A50 % of the LMV margin, the investor would have to have $ 175 on his account.
The rest of the money would be provided as a loan. This amount is a Debethnic balance. In the above example, the debit balance would be $ 175. The investor's capital equals a long market value minus the debit balance. Since the investor of the above example has $ 350 LMV and a debit balance of $ 175, his own capital in the account would be $ 175.