Michael Purchased 1000 Shares of Stock at a Price of $16

question 107

Multiple Choice

Michael purchased 1000 shares of stock at a price of $16 a share.He utilized his 50% margin account to make the purchase.What is Michael's initial equity in this investment?

• A)-$16,000
• B)$16,000
• C)$8,000
• D)-$8,000

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Definitions:

Capital Contribution

Any addition of capital to a company either in cash or in kind by its owners or shareholders to increase its base capital.

Voting Rights

The rights of shareholders to vote on key company decisions, often exercised during annual general meetings or via proxy voting.

Joint Operation

A joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.