Candace is an investor who purchases stock using credit. If the Federal Reserve Board lowers the margin requirement on buying stock with credit, what would Candace be likely to do?

Question

Quizplus · Accepted Answer

In this scenario, Candace would most likely buy more stock. The Fed has the authority to set the minimum down payment investors must use for credit purchases of stock. Buying stock with credit, "buying on the margin"
is a popular investment strategy among individual speculators. When the Fed alters the margin requirement, it can effectively control the total amount of credit borrowing in the stock market.

Candace Is an Investor Who Purchases Stock Using Credit