The interest rate charged on margin accounts is determined by:
A)adding a percentage to the broker call rate.
B)adding a percentage to the margin interest rate.
C)subtracting a percentage to the broker call rate.
D)subtracting a percentage to the margin interest rate.

Question

Quizplus · Accepted Answer

The interest rate charged on margin accounts is determined by adding a percentage to the broker call rate. The broker call rate is the interest rate charged by brokerage firms on loans made to investors for the purchase of securities. By adding a percentage to this rate, the brokerage firm can earn a profit on the loan. Therefore, choice A is the best answer.

The Interest Rate Charged on Margin Accounts Is Determined By