You Own 400 Shares of a Stock That You Purchased

question 3

Multiple Choice

You own 400 shares of a stock that you purchased on margin at a price per share of $20.74. The stock is currently valued at $20 a share. Your broker advised you that your minimum equity position for this purchase is $2,800 as of today. What is the maintenance margin percentage?

• A)25%
• B)30%
• C)35%
• D)40%
• E)50%

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Definitions:

Reaction Formation

A psychological defense mechanism where an individual unconsciously replaces an unacceptable or threatening impulse with an exaggerated version of its opposite.

Overprotective

Describes behaviors that excessively shield others, particularly children, from potential harm, often limiting their experiences and growth.

Sublimation

A psychological process where socially unacceptable impulses or idealizations are consciously transformed into socially acceptable actions or behavior, possibly resulting in a long-term conversion of the initial impulse.

General Adaptation Syndrome

A theory proposed by Hans Selye that explains the body's response to stress in three stages: alarm, resistance, and exhaustion.