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# Michael's broker sends Michael a margin call if the equity

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Intern
Joined: 29 Dec 2011
Posts: 40

Kudos [?]: 59 [0], given: 29

Michael's broker sends Michael a margin call if the equity [#permalink]

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25 Oct 2012, 20:18
00:00

Difficulty:

25% (medium)

Question Stats:

82% (00:40) correct 18% (00:59) wrong based on 38 sessions

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Michael's broker sends Michael a margin call if the equity balance in his account falls below \$25,000 at the close of any trading day during a 30 day time period. Did the broker send Michael a margin call sometime in the last 30 days?

(1) Michael's trading account balanced declined by \$250,000 during the 30 day period.
(2) At the beginning of the month, Michael's trading account balance was \$125,000.

And I can't see why answer is E and combining statements 1) and 2) does not yield an answer...

Is it because we're saying, just because at the beginning of the month the trading account was at \$125,000, it does not mean to say that this was within the 30 day trade period?

[Reveal] Spoiler: OA

Last edited by Bunuel on 26 Oct 2012, 04:32, edited 1 time in total.
Renamed the topic and edited the question.

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Director
Status: Done with formalities.. and back..
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Location: India
Concentration: Strategy, General Management
Schools: Olin - Wash U - Class of 2015
WE: Information Technology (Computer Software)

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25 Oct 2012, 22:28
elegan wrote:
Hello there,

Michael's broker sends Michael a margin call if the equity balance in his account falls below \$25,000 at the close of any trading day during a 30 day time period. Did the broker send Michael a margin call sometime in the last 30 days?

1. Michael's trading account balanced declined by \$250,000 during the 30 day period.

2. At the beginning of the month, Michael's trading account balance was \$125,000.

And I can't see why answer is E and combining statements 1) and 2) does not yield an answer...

Is it because we're saying, just because at the beginning of the month the trading account was at \$125,000, it does not mean to say that this was within the 30 day trade period?

When combining these 2 statements - do not assume that 30 days period is from 1st to 30th of a month.

for example, what if Michael's 30 days period starts on 5th of September and lasts till 4th of October. from statement i we know from 5th september to 4th october balance declined by 250,000. statement ii says, at the beginning of the month (confusion - beginning of september or october? ) balance was \$125000. Assuming we are talking about current month October - even then we are not sure, that in 4 days of october whether the balance was lower than 25000 on any given day. Hence both statements together are also insufficient.
Therefore Ans E.
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25 Oct 2012, 22:51
elegan wrote:
Hello there,

Michael's broker sends Michael a margin call if the equity balance in his account falls below \$25,000 at the close of any trading day during a 30 day time period. Did the broker send Michael a margin call sometime in the last 30 days?

1. Michael's trading account balanced declined by \$250,000 during the 30 day period.

2. At the beginning of the month, Michael's trading account balance was \$125,000.

And I can't see why answer is E and combining statements 1) and 2) does not yield an answer...

Is it because we're saying, just because at the beginning of the month the trading account was at \$125,000, it does not mean to say that this was within the 30 day trade period?

That could also be a reason. But even if both referred to the same period, it would still not be sufficient. At the beginning of the month the balance was \$125,000. Maybe on the 2nd day of the month the balance increased by \$1,000,000. Then there is a possibility that at no time within the month the balance fell below \$25,000.

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Re: Michael's broker sends Michael a margin call if the equity [#permalink]

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01 Feb 2014, 16:29
elegan wrote:
Michael's broker sends Michael a margin call if the equity balance in his account falls below \$25,000 at the close of any trading day during a 30 day time period. Did the broker send Michael a margin call sometime in the last 30 days?

(1) Michael's trading account balanced declined by \$250,000 during the 30 day period.
(2) At the beginning of the month, Michael's trading account balance was \$125,000.

And I can't see why answer is E and combining statements 1) and 2) does not yield an answer...

Is it because we're saying, just because at the beginning of the month the trading account was at \$125,000, it does not mean to say that this was within the 30 day trade period?

But could Michael have deposited any more money into the account? One should also take this into account no? Or what do you guys think

Cheers
J

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Re: Michael's broker sends Michael a margin call if the equity   [#permalink] 01 Feb 2014, 16:29
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