With a Margin Requirement of 50 Percent

question 27

Multiple Choice

With a margin requirement of 50 percent,

• A) a bank has to keep 50 percent of its deposits with its Federal Reserve District Bank or within its own vaults.
• B) a bank can lend 50 percent of its deposits to individuals and firms.
• C) an investor purchasing $6,000 in stock must pay at least $3,000 of it in cash.
• D) an investor purchasing $6,000 in stock must pay at least $50 of it in cash.
• E) investors must invest in something yielding a 50 percent return on their investment.

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Definitions:

Co-signs

The act of signing a loan or agreement jointly with another person, thereby assuming equal responsibility for the repayment.

Collectively

refers to actions or measures taken as a whole by a group of people or entities.

Primarily Liable

Having the main or first responsibility for a debt or obligation.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payee’s name on it.