Margin Calls Are More Likely to Happen When Markets Are

question 123

Multiple Choice

Margin calls are more likely to happen when markets are:

• A)crashing.
• B)booming.
• C)stable.
• D)None of these statements is true.

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, often the minimum amount the security can be sold for.

Stockholders' Equity

The value of a company divided among its shareholders, often represented as the difference between assets and liabilities.

Additional Paid-In Capital

The amount of money investors have paid for shares above the nominal value during stock issuances, reflecting excess capital received by a company.

Dividends In Arrears

The unpaid dividends on preferred shares that have not been distributed to shareholders, typically because a company has insufficient profits.