Which One of the Following Statements About Margin Trading Is

question 98

Multiple Choice

Which one of the following statements about margin trading is correct?

• A) The Securities Exchange Commission sets the minimum margin requirement for margin trading.
• B) If Fred buys $1,000 worth of stock using 60% margin, he will need to pay $600 in cash to make the purchase.
• C) Margin traders are willing to accept lower return to reduce their risk.
• D) Margin traders are pessimistic about the future price of the stock.

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Definitions:

Multiplier

In economics, a factor by which a change in one economic variable, such as spending, leads to a greater change in another variable, such as GDP.

Nondiscretionary Fiscal Policy

involves automatic stabilizers that adjust government spending and taxes without the need for new legislation, helping to moderate the business cycle.

National Defense

The governmental activities and structures designed to protect a country from external threats and ensure its security.

Tax Receipts

The income received by the government from taxes. It represents the primary source of revenue for government operations.