Brokers' calls
A) are funds used by individuals who wish to buy stocks on margin.
B) are funds borrowed by the broker from the bank,with the agreement to repay the bank immediately if requested to do so.
C) carry a rate that is usually about one percentage point lower than the rate on U.S.T-bills.
D) a and b.
E) a and c.

Question

Quizplus · Accepted Answer

Brokers' calls are funds used by individuals who wish to buy stocks on margin, but they are also borrowed by the broker from the bank with the agreement to repay immediately if requested to do so. Therefore, options A and B are correct. The interest rate on brokers' calls is typically tied to the rate on U.S. Treasury bills, with a spread of about one percentage point. Therefore, option C is not correct.

Brokers' Calls