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PRMIA Exam 8006 Topic 7 Question 12 Discussion

Actual exam question for PRMIA's Exam I: Finance Theory, Financial Instruments, Financial Markets ? 2015 Edition exam
Question #: 12
Topic #: 7
[All Exam I: Finance Theory, Financial Instruments, Financial Markets ? 2015 Edition Questions]

The Federal Reserve tries to limit margin trading using which of the following techniques?

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Suggested Answer: A

In the US, the Federal Reserve sets a limit (eg, 2 x, so that only 50% of the money could be borrowed) as a multiple of capital posted to prevent excessive leverage or gearing in the system.

The other choices are incorrect.


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