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:

Sales Quantity

The total number of units of a product or service sold within a specific period.

Variable Cost

A corporate expense that changes in proportion with the level of output or sales.

Fixed Costs

Charges that stay the same no matter how much is manufactured or sold, including rental fees, employee pay, and protection premiums.

Depreciation

The accounting method of allocating the cost of a tangible or physical asset over its useful life, reflecting the decrease in value of the asset over time.