What does an investor have to do when he or she receives a margin call?
A) Return all of the stock purchased with the borrowed funds.
B) Give the brokerage firm all of the shares of stock purchased using the margin requirement.
C) Return the borrowed funds in full along with fees and interest.
D) Provide additional cash or securities as collateral for the borrowed money.
E) Exchange the borrowed stock for one with greater growth potential.

Question

Quizplus · Accepted Answer

When an investor receives a margin call, they are required to provide additional cash or securities as collateral for the borrowed money to make up for the increased margin requirement. This is typically due to a decline in the value of the underlying securities in the account. Returning all of the stock purchased with the borrowed funds or giving the brokerage firm all of the shares of stock purchased using the margin requirement would not be sufficient to satisfy the margin call. Returning the borrowed funds in full along with fees and interest would also not be sufficient if the account value has declined below the required margin level. Exchanging the borrowed stock for one with greater growth potential would not help address the margin call.

What Does an Investor Have to Do When He or She