You Want to Buy $10,000 of Securities in Your Margin

question 115

Multiple Choice

You want to buy $10,000 of securities in your margin account. Your advisor has informed you that you must pay a minimum of $65,000 or 6.5% of the purchase price in cash and thereafter maintain a minimum equity position of 30%. The initial margin requirement is ___ and the maintenance margin is ____

• A) 35%; 30%
• B) 35%; 70%
• C) 65%; 30%
• D) 65%; 35%
• E) 65%; 70%

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Definitions:

Gross Margin

The difference between sales revenue and the cost of goods sold, showing the profitability of sales before other operating expenses are deducted.

Cost of Goods

The total direct costs attributable to the production of goods sold by a company, including materials and labor.

Cost of Goods Manufactured

The aggregate expense of finished goods within a certain timeframe, encompassing materials, workforce, and indirect costs.

Work in Process Inventory

Inventory at various stages of production, not yet completed but undergoing manufacturing processes.