A customer has a fully paid options position and is long marginable stock. Subsequently he receives a margin call on his long stock position. Which of the following statements are TRUE?

I The customer can borrow against long options contracts to satisfy a portion of the margin call
II The customer cannot borrow against the long options contracts to satisfy the margin call
III Long option contracts have a loan value of 0%
IV Long option contracts have a loan value of 50%

a. I and III
b. I and IV
c. II and III
d. II and IV

Question

24-08-2020
Business

contestada

A customer has a fully paid options position and is long marginable stock. Subsequently he receives a margin call on his long stock position. Which of the following statements are TRUE?

I The customer can borrow against long options contracts to satisfy a portion of the margin call
II The customer cannot borrow against the long options contracts to satisfy the margin call
III Long option contracts have a loan value of 0%
IV Long option contracts have a loan value of 50%

a. I and III
b. I and IV
c. II and III
d. II and IV

Respuesta :

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topeadeniran2 topeadeniran2 · Answer 1 · 2020-08-26T02:45:01+02:00

Answer: II and III

Explanation:

From the question, we are informed that a customer has a fully paid options position and is long marginable stock and that subsequently he receives a margin call on his long stock position.

The statements that are true are that the customer cannot borrow against the long options contracts to satisfy the margin call and the long option contracts have a loan value of 0%.

Therefore, option C is the right answer.