An investor who trades on margin generally will receive a margin call when the stock price increases significantly because the broker needs to determine whether the investor wants to liquidate the position to take advantage of the profits that are available.

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An investor who trades on margin generally receives a margin call when the stock price decreases significantly, as the broker needs to determine whether the investor has sufficient funds to cover the loss and may require additional funds to be deposited to avoid the position being liquidated. A significant increase in stock price would typically benefit the investor and not trigger a margin call.

An Investor Who Trades on Margin Generally Will Receive a Margin