Which of the Following Statements Is Not True

question 118

Multiple Choice

Which of the following statements is not true?

• A)When buying stock on margin, an investor borrows part of the money necessary to buy a particular stock.
• B)Usually, the brokerage firm lends the money or arranges for the loan in a margin transaction.
• C)Investors buy on margin because doing so offers them the potential for greater profits.
• D)The margin requirement is set by the exchanges.
• E)The current margin requirement is identical for all exchanges.

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Definitions:

Market Price

The current market value at which one can buy or sell services or assets.

Merger Premium

The excess amount that an acquiring company pays over the market value of the shares of the company it is buying.

Cash Acquisition

The purchase of a target company using cash as the form of payment rather than stocks or other methods of payment.

After-Merger Earnings

The net income of a company following the completion of a merger, reflecting the financial performance after the consolidation of assets and operations.