Explain the process of margin trading. What does an investor need to be careful of?
What will be an ideal response?
Margin trading means that the investor does not pay the full price for the stock but rather puts down a portion of the price and borrows the remainder from the broker. The broker retains the stock as collateral and charges interest on the loan. Margin, or the percentage of the purchase price required in cash, is under the control of the Federal Reserve Board and can change. Margin trading enables an individual to leverage a purchase. Investors must take care when buying on margin; if the stock value falls, the broker may require them to pay back the loan. The broker will issue a margin call if it is believed that the investor does not have sufficient assets in the brokerage account to cover the loan. In such a case, the investor may have to liquidate the stock purchase at the current price and add additional cash from some other account to cover the margin call.
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Petty cash typically is composed of coins and currency kept on hand in a business to make minor disbursements
a. True b. False Indicate whether the statement is true or false
?Which of the following monetary assets is likely to be least liquid?
A. Coins and currency B. ?Travelers checks C. Funds held in checking accounts D. ?Funds held as certificate of deposits
Victory Tire Company makes a special kind of racing tire. Variable costs are $220 per unit, and fixed costs are $10,000 per month. Victory sells 700 units per month at a sales price of $310. If the quality of the tire is upgraded, the company believes it can increase the sales price to $350. If so, the variable cost will increase to $230 per unit, and the fixed costs will remain the same. If Victory decides to upgrade, how will it affect operating income?
A) Operating income will decrease by $21,000. B) Operating income will decrease by $7000. C) Operating income will increase by $7000. D) Operating income will increase by $21,000.
A major reason for using summary confirmation questions is to clarify and confirm:
A) product benefits B) product features C) customer buying conditions D) customer need perceptions E) organizational needs