Yesterday, Alberto purchased on margin 100 shares of stock in the ABC Corporation for $40 per share. Today, the price of the shares dropped by $10 per share. Alberto expects his broker to issue a margin call.

Question

Quizplus · Accepted Answer

A margin call occurs when the value of the securities purchased on margin decreases below a certain point, requiring the investor to either deposit additional funds or sell some of the securities to cover the margin loan. In this case, the value of Alberto's shares dropped by $10 per share, which would likely result in his broker issuing a margin call.

Yesterday, Alberto Purchased on Margin 100 Shares of Stock in the ABC