Stuart purchased 300 shares of Microsoft stock which he has pledged to his broker as collateral for the loan in his margin account.This process of pledging securities is called:
A)margin calling.
B)hypothecation.
C)leveraging.
D)maintaining the margin.
E)street securitization.

Question

Quizplus · Accepted Answer

The process of pledging securities as collateral for a loan in a margin account is called hypothecation. Marging calling refers to a broker demanding additional funds or securities to bring the margin account up to the required level. Leveraging refers to using borrowed funds to increase the potential return on an investment. Maintaining the margin refers to ensuring that the margin account meets the required minimum balance. Street securitization refers to the process of bundling together various financial assets to create a security that can be traded on the open market.

Stuart Purchased 300 Shares of Microsoft Stock Which He Has