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:

Transposition Error

A mistake made when digits within a number are inadvertently reversed or misplaced in the recording process.

Slide Error

An accounting error resulting from moving decimal points improperly in figures, not due to mathematical mistakes.

Trial Balance

A trial balance is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account columns to check the balance of a company's accounting system.

Prepaid Insurance

An expense paid in advance for insurance coverage, recorded as a current asset on the balance sheet until the coverage period elapses.