If You Buy 100 Shares of IBM for $120/share, and the Margin

question 269

True/False

If you buy 100 shares of IBM for $120/share, and the margin on your account is 50%, the broker will float you an interest-free loan of $6,000, until the price of IBM sufficiently rises to the point where you are willing to sell. You pay the broker back its $6,000, and you enjoy the capital gain.

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Definitions:

Social Darwinism

Application of Charles Darwin’s theory of natural selection to society; used the concept of the “survival of the fittest” to justify class distinctions and to explain poverty.

Industrial Corporation

A large company involved in the manufacturing or production of goods on a large scale, often employing many people and having significant economic influence.

Inequality

The unequal distribution of resources, wealth, opportunities, and rights among individuals or groups in a society.

Native Americans

The indigenous peoples of the United States, including both American Indian and Alaska Native groups.