What Is the Purpose of a Margin Call

question 3

Multiple Choice

What is the purpose of a margin call?

• A) to inform you that your margin loan is due and payable
• B) to demand funds to increase your margin position
• C) to let you know the amount of funds that are now available for you to borrow
• D) to advise you that the interest rate on your loan has changed
• E) to remind you of the upcoming monthly payment due on your margin loan

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Definitions:

Marginal Cost

The increase in total cost that arises from producing an additional unit of a good or service.

Average Variable Cost

The total variable costs (costs that change with the level of output) divided by the quantity of output produced.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, illustrating how fixed costs per unit change with output levels.

MC

Marginal Cost, the cost of producing one additional unit of a good.