An Investor Who Trades on Margin Generally Will Receive a Margin

question 16

True/False

An investor who trades on margin generally will receive a margin call when the stock price increases significantly because the broker needs to determine whether the investor wants to liquidate the position to take advantage of the profits that are available.

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Definitions:

Drawing

Withdrawals of cash or other assets from a business by the owner for personal use, affecting the owner's equity.

Drawing Accounts

Personal accounts of the owners or partners in a business representing withdrawals of the business's assets for personal use.

Revenue Accounts

are ledger accounts that track the income earned by a company from its normal business operations, which is then reported on the income statement.

Expense Accounts

Accounts used in accounting to record all expenses transactions made by a business.