Nelson Purchased 1,600 Shares of Stock for $18

question 77

Multiple Choice

Nelson purchased 1,600 shares of stock for $18.75 a share.The initial margin requirement is 70 percent and the maintenance margin is 40 percent.What is the maximum percent by which the stock price can decline before he receives a margin call?

• A) 30 percent
• B) 45 percent
• C) 50 percent
• D) 65 percent
• E) 70 percent

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Definitions:

Net Present Value

A financial metric that calculates the difference between the present value of cash inflows and outflows over a period, used in capital budgeting to assess the profitability of an investment.

Online MBA

A Master of Business Administration program that is delivered fully or partially through internet-based learning platforms.

Net Present Value

A financial metric used to evaluate the profitability of an investment or project, calculated by summing all expected future cash flows, discounted back to their present value.

Discount Rate

The discount rate that is employed to ascertain the present worth of future cash streams in a discounted cash flow assessment.