If the Federal Reserve Has Set the Margin Requirement at 50

question 59

True/False

If the Federal Reserve has set the margin requirement at 50 percent, an investor can buy three times as many shares of stock by choosing to buy on margin.

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Definitions:

FIFO Inventory Method

A method of accounting for inventory that assumes the first items placed in inventory are the first sold.

Balance Sheet

A document that provides a snapshot of a corporation's assets, debts, and shareholder's equity at a given point in time.

Increasing Unit Costs

Refers to the situation where the cost to produce or purchase a single unit of product rises, often due to inflation, increased material costs, or labor costs.

Direct Material Costs

Costs that are directly attributable to the production of goods, such as raw materials.