Andrew Buys 1,000 Shares of AT&T Stock with a Margin

question 32

Multiple Choice

Andrew buys 1,000 shares of AT&T stock with a margin requirement of 50 percent. At the time of the original transaction, AT&T stock was $24 per share. When AT&T stock then falls to about $12 per share, Andrew will likely receive a(n) ____ from the brokerage firm.

• A) margin cancellation
• B) short sell
• C) margin call
• D) increased margin requirement
• E) speculative recall

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Definitions:

Credits

Accounting entries that increase liabilities or equity or decrease assets or expenses.

Account Balances

The amounts in financial accounts, representing the net value at a particular point in time after accounting for all debits and credits.

Asset Accounts

These accounts on the balance sheet represent the resources owned or controlled by a business, which provide future economic benefits.

Revenue Accounts

Accounts that track the income generated by a company from its normal business operations, such as sales of goods or services.