Which of the Following Describes a Margin Call

question 108

Multiple Choice

Which of the following describes a margin call?

• A) A broker forces a person in danger of running through their money to sell their stock and use the money to pay back their loan.
• B) A market reaches a tipping point, and policy-makers have to decide whether to intervene and prop up struggling financial institutions.
• C) Prices on future values of a stock are forecasted to be lower than current prices.
• D) Prices on future values of a stock are forecasted to be higher than current prices.

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Definitions:

Free Cash Flow

The revenue a firm accrues post-deducting expenses associated with operational support and upkeep of its capital goods.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, often used in accounting to find the average cost of goods sold.

Free Cash Flow

The amount of cash that a company generates after accounting for cash outflows to support operations and maintain capital assets.

Stock Options

Financial instruments that give the holder the right, but not the obligation, to buy or sell shares of a stock at a specified price before a specified date.