A Brokerage Firm May Set a Lower Margin Requirement Than

question 72

True/False

A brokerage firm may set a lower margin requirement than that set by the Federal Reserve Board.

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Definitions:

Gross Margin

The difference between revenue and cost of goods sold divided by revenue, expressed as a percentage.

Times Interest Earned

A ratio that measures a company's ability to meet its debt obligations, calculated by dividing earnings before interest and taxes by the interest expense.

Debt-To-Equity Ratio

A financial ratio indicating the relative proportion of shareholder's equity and debt used to finance a company's assets.

Equity Multiplier

A financial leverage ratio that measures the portion of a company`s assets that are financed by its shareholders' equity.