You Purchased 700 Shares of Stock for $54

question 96

Multiple Choice

You purchased 700 shares of stock for $54.30 a share.The initial margin requirement is 75 percent and the maintenance margin is 35 percent.What is the maximum percentage decrease that can occur in the stock price before you receive a margin call?

• A)35 percent
• B)38 percent
• C)48 percent
• D)57 percent
• E)62 percent

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Definitions:

Wages

Payments made to workers for their labor, usually calculated on an hourly, daily, or piecework basis.

Salaries

Salaries refer to the regular payments made by employers to employees, typically on a monthly or bi-weekly basis, in exchange for their labor or services.

Shutting Down

A short-term decision by a firm to cease production due to market conditions, typically when revenue does not cover variable costs.

Fixed Costs

These are business expenses that remain constant regardless of the level of goods or services produced, such as rent, salaries, and insurance premiums.