You Have an Arrangement with Your Brokerage Firm That Allows

question 25

Multiple Choice

You have an arrangement with your brokerage firm that allows you to purchase stock on margin with an initial margin requirement of 25 percent and a broker loan rate of 10 percent.What is the maximum amount of stock you can purchase on margin if you have $20,000 to invest?

• A) $150,000
• B) $72,000
• C) $80,000
• D) $22,000
• E) $200,000

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Definitions:

Package Carrier

Companies or services that specialize in the delivery of packages, documents, and freight from one location to another.

Private Fleet

A fleet of transportation vehicles owned and operated by a company for its own logistics and distribution needs.

Safety Inventory

Extra inventory held as a buffer against demand variability and supply chain disruptions to prevent stockouts.

Cycle Inventory

The portion of inventory that companies hold to facilitate smooth production and sales operations, fluctuating based on production cycle needs.