Justin Just Made a Margin Purchase of 100 Shares of DEF

question 90

Multiple Choice

Justin just made a margin purchase of 100 shares of DEF Corp. for $22.50 per share. The initial margin is 70%. The maintenance margin is 30%. How low can the price of each share of DEF be before Justin will have to add equity to his account?

• A) $4.73
• B) $5.25
• C) $6.75
• D) $9.64

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Definitions:

Cash Incentive

A monetary reward given to stimulate behavior or performance, often used in work or promotional contexts.

Production Line

An arrangement of workers and machinery in a factory where the product being assembled passes consecutively from operation to operation until completed.

Perceptual Distortions

Errors in judgment or interpretation caused by inaccuracies in the perception of sensory information.

Textbook

A book containing detailed information on a specific subject or subjects, used as a reference or for instructional purposes.