You Have a Margin Account with a 65% Initial Margin

question 98

Multiple Choice

You have a margin account with a 65% initial margin and a 30% maintenance margin. What is the maximum amount you can purchase of a stock if your cash balance in the account is $14,600?

• A) $19,710.00
• B) $22,461.54
• C) $24,090.00
• D) $41,713.79
• E) $48,666.67

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Definitions:

Administrative Expenses

Costs related to the management and general operations of a business, such as salaries of senior executives, legal and financial services.

Romanticizing Risk

Romanticizing risk involves perceiving potential dangers and uncertainties in overly positive or idealized ways, often ignoring the possible negative outcomes.

Financially Hard-pressed

A situation or condition where an individual or organization is experiencing financial strain, often leading to budget constraints and difficult financial decisions.

Riskier Projects

Projects that involve a higher level of uncertainty and potential for loss or failure, often seeking greater rewards or breakthrough results.