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Stocks


             Regulation T sets the minimum percentage of the payment you must make when you buy stock on margin. The FED has a higher margin rate through Regulation T which means that it can control over speculation in stocks and stock market credit. It prevents another stock market crash. It will rise if there is a bullish market and go down if it is a bearish market. Regulation T is important to margin buying because Since January 1974, the Regulation T has been set at 50%.
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             B. When having a margin buying, your broker will give you the money in a broker's loan rate which is at their own interest rate which can fluctuate. Also when opening a margin account, the broker gets control of your margined stock. When margin buying, you pay back the money you owe and if the stock were to fall below 50% of the stock, your broker will give you a margin call. A margin call is when you have to deposit additional money in a margin account to prevent the broker from selling margined stock whose price has dropped sharply. There's also a margin maintenance rule that states that the broker must ask customers for more margin whenever there equity falls below 25% of the current value.
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             C. As prices declined in the fall of 1929, and people couldn't pay back their zero to 20% margins. Also people began selling stocks which lowered the stock's price further resulting in margin calls and more forced selling stocks as the price continue to fell. The low margins left them in a dependent position as lenders rapidly empty their assets. With the customers frequently lacking the cash, all the brokers could do was sell the customer out by selling the stock in a declining market. The reason why many didn't care about the stock was because the people didn't care about the zero to 20% margin and left the stocks in the brokers' hand hoping they would bail them out when the stock fell.
            


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