What is the purpose of a margin call?
A) to inform you that your margin loan is due and payable
B) to demand funds to increase your margin position
C) to let you know the amount of funds that are now available for you to borrow
D) to advise you that the interest rate on your loan has changed
E) to remind you of the upcoming monthly payment due on your margin loan

Question

Quizplus · Accepted Answer

The purpose of a margin call is to demand funds from an investor to increase their margin position. Margin is the amount of money an investor borrows from a broker to purchase securities. If the value of the securities purchased with the margin drops below a certain level, the broker will issue a margin call to the investor to ask for additional funds to maintain the required margin level. Failure to meet a margin call can result in the forced sale of securities in the investor's account to cover the margin shortfall.

What Is the Purpose of a Margin Call