Todd Has a Margin Account with $17,400 in Available Cash

question 16

Multiple Choice

Todd has a margin account with $17,400 in available cash. The initial margin is 70% and the maintenance margin is 30%. What is the maximum number of shares he can purchase if the price per share is $44?

• A)395 shares
• B)564 shares
• C)698 shares
• D)744 shares
• E)842 shares

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Definitions:

Additional Revenue

Income gained from any additional unit of output or sale beyond the current level of production or service.

Rent

A payment made by tenants to landlords in exchange for the use of real estate, equipment, or other properties.

Marginal Physical Product

The additional output that can be produced by adding one more unit of a specific input, holding all other inputs constant.

MRP

Marginal Revenue Product; the additional revenue generated from employing one more unit of input or labor.