If a long margin account has a market value of $20,000 and a debit balance of $12,000, what is the account's status?

In a long margin account, the relationship between the market value and the debit balance is crucial in determining its status. In this case, the market value of the account is $20,000, and the debit balance, which represents the amount borrowed from the broker, is $12,000.

To assess whether the account is restricted, we can use the concept of equity, which is calculated as the market value minus the debit balance. Here, the equity would be $20,000 (market value) - $12,000 (debit balance) = $8,000.

A margin account can be considered restricted if the equity falls below the required maintenance margin. Generally, maintenance margin requirements are set at a certain percentage of the current market value. If the equity is insufficient to meet these requirements, the account is classified as restricted, which may limit the investor's ability to withdraw funds or make new trades without depositing additional funds.

In this scenario, since the current equity of $8,000 must be evaluated against the maintenance margin requirement set by the brokerage, it likely indicates that the account is restricted. Therefore, the appropriate status of the account is indeed restricted, aligning with the provided answer.