An Investor Receives a Margin Call Because

question 46

Multiple Choice

An investor receives a margin call because

• A) the value of the stock that was sold short has decreased below a price specified by the broker.
• B) the brokerage firm wants to provide her with information about a new public stock issue that it will be handling in the future.
• C) interest rates in the financial markets have increased substantially,and the brokerage firm wants her to immediately repay the loan she has outstanding.
• D) the Federal Reserve intends to sell a special issue of Treasury securities and it needs investors to subscribe to the issue as quickly as possible.
• E) the price of the stock she purchased on margin has decreased enough so that the actual margin is below the maintenance margin.

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Definitions:

U.S. Immigrants

People who have moved to the United States from another country to live permanently.

Real Wage Rates

The purchasing power of wages, adjusted for inflation, indicating the quantity of goods and services wages can buy.

Technological Advance

The introduction of new technologies or improvements in existing technologies that increase productivity and efficiency.

Demand for Labor

The total amount of labor that employers in the economy are willing to hire at a given wage rate, influenced by factors such as productivity, economic conditions, and regulatory environment.