A brokerage firm currently limits the margin rate to 70 percent. The amount that can be borrowed from a transaction to buy 100 shares at $50 is

Question

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The total cost of buying 100 shares at $50 is $5000. With a margin rate of 70 percent, the investor can borrow 70 percent of the total cost, which is $3500. Therefore, the amount that can be borrowed from this transaction is $3500.

A Brokerage Firm Currently Limits the Margin Rate to 70