If a Stock Is Bought on Margin

question 72

Multiple Choice

If a stock is bought on margin,

• A) part of the cost of investment is borrowed
• B) the commissions on the investment are increased
• C) the cost of the investment is reduced
• D) the interest on the borrowed funds is set by the Securities and Exchange Commission (SEC)

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Definitions:

Express

Implies clear and direct communication or conveyance of an idea, intention, or item without any ambiguity.

Executory

A term applied to a contract in which not all of the terms have been fully performed.

Doctrine of Substantial Performance

A legal principle acknowledging that if a party has performed enough of its contractual obligations, it may warrant payment, minus damages for incomplete work.

Complete Performance

Contract performance that occurs when all aspects of the parties’ duties under the contract are carried out perfectly.