If Jamie Wanted to Purchase Disney Stock Using Borrowed Money

question 37

Multiple Choice

If Jamie wanted to purchase Disney stock using borrowed money and had $4,000 of her own money to use, what is the maximum amount of stock she can purchase with a margin requirement of 50 percent?

• A) $2,000
• B) $4,000
• C) $0
• D) $8,000
• E) $6,000

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Definitions:

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer, which may not necessarily reflect its market value.

Stock Split

A corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares, though the overall value of the company remains the same.

Market Value

The market price at which an asset or service can be transacted currently.

Shares Outstanding

The total number of shares of a corporation that have been authorized, issued, and purchased by investors and are held by them.