You Have an Arrangement with Your Brokerage Firm That Allows

Multiple Choice

You have an arrangement with your brokerage firm that allows you to purchase stock on margin with an initial margin requirement of 25 percent and a broker loan rate of 10 percent.What is the maximum amount of stock you can purchase on margin if you have $20,000 to invest?

A) $150,000
B) $72,000
C) $80,000
D) $22,000
E) $200,000