Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Select all of the following statements that are true in regards to margin calls: A margin call occurs when the value of an investor's margin

image text in transcribed

Select all of the following statements that are true in regards to margin calls: A margin call occurs when the value of an investor's margin account falls below the broker's required minimum threshold. More concentrated portfolios are less likely to be involved in a margin call. A margin call is a formality that an investor can ignore without penalty. The Federal Reserve Board determines the rules for when margin calls should be made. Investors with a large enough portfolio (typically hedge funds) can have a notable impact on the securities when their position is liquidated and cause ripple effects throughout the market. A margin call is made when the value of an account rises, so the investor needs to take capital out to stay below the maximum margin. The firm enforcing the margin call has the right to liquidate your current positions in the market without consultation if you are unable to deposit enough cash. A margin call can lead to the investor having to put up unrelated assets for collateral.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investments

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

9th Edition

73530700, 978-0073530703

More Books

Students also viewed these Finance questions

Question

List the laws administered by the EEOC.

Answered: 1 week ago