What Is the Purpose of a Margin Call

question 3

Multiple Choice

What is the purpose of a margin call?

• A) to inform you that your margin loan is due and payable
• B) to demand funds to increase your margin position
• C) to let you know the amount of funds that are now available for you to borrow
• D) to advise you that the interest rate on your loan has changed
• E) to remind you of the upcoming monthly payment due on your margin loan

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Definitions:

Expected Payoff

Expected Payoff is a term often used in economics and finance to describe the average outcome of a set of uncertain events, considering each possible outcome and its probability.

Perfect Information

A situation in which all participants have access to all the information needed to make an informed decision.

State Of Nature

A term in decision theory and statistics referring to the actual outcome or underlying reality that affects decision-making or outcomes.

Sample Information

Information or data collected from a subset of a larger population, used to infer characteristics or parameters of the whole population.