Margin accounts are established to allow
investors the ability to use leverage with their investments.
The initial margin, which is set by the Federal Reserve
is what percentage?
The correct answer is a):
A margin account allows you to buy additional securities
by leveraging the value of your eligible shares. The
initial margin is 50% which is set by the Federal Reserve.
This means that when an investment is made by an investor,
half of the funds must be put up by the investor and
the other half is borrowed from the broker. The broker
(lender) will charge the investor margin interest to
compensate for the loan arrangement.