How is the net equity position of a client calculated?

• A. Total assets minus total liabilities
• B. Total investments minus total profits
• C. Value of securities held minus cash reserves
• D. Cash balances in accounts only

Answer: (A)

The net equity position of a client is calculated as total assets minus total liabilities. This formula provides a clear picture of the net worth of the client's investments and other holdings, illustrating their overall financial health.

In this context, total assets encompass all investments, properties, and other valuable assets owned by the client, while total liabilities include all debts and obligations. By subtracting liabilities from assets, one can determine the amount of equity the client has, which indicates the portion of their net worth that they actually own, free of debts.

Other methods of calculation, such as focusing solely on investments, profits, or cash balances, do not give a comprehensive view of the client’s financial situation. Those options could provide insights into specific areas but do not reflect the overall net equity position. Thus, the first option accurately encapsulates the full scope of net equity calculation.