The minimum equity that must be maintained at all times in a margin account is called the:
A)initial margin.
B)initial equity position.
C)maintenance margin.
D)call requirement.
E)margin call.

Question

Quizplus · Accepted Answer

The maintenance margin is the minimum level of equity that the investor must maintain in their margin account at all times. If the equity falls below this level, the investor may receive a margin call requiring them to deposit more funds or securities into the account to bring the equity back up to the maintenance margin level. The initial margin is the amount of equity required to be deposited when first opening a margin account. The initial equity position is not a commonly used term in the context of margin accounts. The call requirement and margin call are related terms that refer to the action taken by the broker when the equity falls below maintenance margin, but they do not refer to the minimum equity requirement itself.

The Minimum Equity That Must Be Maintained at All Times