Understanding Margin in Trading

What is one of the primary benefits of using margin in trading?

• It eliminates the need for a broker.

• It increases buying power.

• It guarantees profits.

• It reduces the risk of loss.

According to Regulation T, what percentage of a marginable security's purchase price can investors borrow?

• 100%

• 75%

• 50%

• 25%

What is a margin call?

• A request from the broker to increase your account balance.

• A requirement to sell all your stocks immediately.

• A notification that your account has doubled in value.

• A call from the broker to congratulate you on a successful trade.

What is one way to avoid a margin call?

• Only invest in high-risk stocks.

• Set aside some buying power for market downturns.

• Ignore market movements.

• Invest all available buying power at once.

What is a requirement to qualify for margin trading?

• Having a minimum of $500 in equity.

• Signing a margin agreement and maintaining at least $2,000 in equity.

• Owning a diversified portfolio.

• Having a credit score above 800.