If You Ignore a Margin Call, Your Broker

question 68

Multiple Choice

If you ignore a margin call, your broker:

• A)will seize all the assets in your account.
• B)will close your account.
• C)may place a short sale on your behalf to cover the amount of the call.
• D)may sell some of your securities to repay the margin loan.
• E)will increase both your margin loan and the rate of interest on that loan.

Explain the tax implications and disadvantages of the corporate structure.

Understand the concepts of paid-in capital and its sources.

Recognize the impact of cash dividends on corporate finance.

Understand the accounting for no-par and par stock transactions.

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Definitions:

Marginal Costs

The cost incurred by producing one additional unit of a product or service.

Economic Returns

The financial gains or profits achieved from an investment or business operation.

Tragedy Of The Commons

A situation in which individual users, acting independently according to their own self-interest, deplete or spoil shared resources, even though it is not in anyone's long-term interest for this to happen.

Equator

An imaginary line around the Earth's surface located equidistant from the North and South Poles, dividing the Earth into the Northern and Southern Hemispheres.