Stuart Purchased 300 Shares of Microsoft Stock Which He Has

question 9

Multiple Choice

Stuart purchased 300 shares of Microsoft stock which he has pledged to his broker as collateral for the loan in his margin account.This process of pledging securities is called:

• A)margin calling.
• B)hypothecation.
• C)leveraging.
• D)maintaining the margin.
• E)street securitization.

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Definitions:

Price Searchers

Firms or individuals that have the flexibility to set their prices because they offer unique products or services and face little to no direct competition.

Entry Barriers

Impediments that make it difficult for new participants to enter a specific industry or business field.

Monopolistic Competition

A term often used by economists to describe markets characterized by a large number of sellers that supply differentiated products to a market with low barriers to entry. Essentially, it is an alternative term for a competitive price-searcher market.

Marginal Revenue

Extra profit generated from the sale of one more unit of a product or service.