In addition to your own investment,you borrowed money from your broker to purchase shares of a stock.Your broker called to tell you that the price of your stock has fallen and you now need to contribute more of your own money to keep the account at the minimum level.This is termed a(n)
A)account validation.
B)margin call.
C)minimum validation.
D)stop-loss order.
E)none of the above.

Question

Quizplus · Accepted Answer

This scenario describes a margin call, which occurs when the value of the securities purchased with borrowed funds falls below a certain level. The broker then requires the investor to contribute more cash or securities to maintain the minimum margin requirement. Option A (account validation) and option C (minimum validation) are not common terms in the financial industry. Option D (stop-loss order) is an order to sell a security when it reaches a certain price and is not relevant to this scenario.

In Addition to Your Own Investment,you Borrowed Money from Your