The minimum level by which an investor's equity position may fall as a result of unfavorable price movement before the investor is required to deposit additional margin is called:
A) The initial margin.
B) The maintenance margin.
C) The variation margin.
D) A and b only.
E) None of the above.

Question

Quizplus · Accepted Answer

The maintenance margin is the minimum amount of equity an investor must maintain in their margin account after the purchase has been made, to cover potential losses. If the account falls below this level due to unfavorable price movements, the investor must deposit additional funds to meet the maintenance margin requirement.

The Minimum Level by Which an Investor's Equity Position May