An Investor Who Trades on Margin Generally Will Receive a Margin

question 16

True/False

An investor who trades on margin generally will receive a margin call when the stock price increases significantly because the broker needs to determine whether the investor wants to liquidate the position to take advantage of the profits that are available.

---

Definitions:

Finance Charge

The total cost of borrowing, including interest and any other charges, assessed on credit accounts.

Accounts Receivable

The amount due to a company from its clients for goods or services rendered that remain unpaid.

Sales Returns

Goods returned by customers to the seller for refund or exchange due to defects, dissatisfaction, or other reasons.

Cash Discounts

Reductions in the amount owed by a customer if payment is made within a specified period, incentivizing early payment.