Question

1. A house call is declared by the broker. The investor must
   1. Return to the maintenance ratio.
   2. Liquidate securities.
   3. Return to the initial margin.
   4. Write a check for the interest every month.

2. A callable bond is
   1. A short bond and a long call.
   2. A long bond and a short call.
   3. A short bond and a short call.
   4. A long bond and a long call.

Answer 1

Ans 1) C Return to the Initial Margin.

A House call is the margin call made by the broker from the customer whose margin has fallen below maintenance margin in order to make the margin back to Initial Margin.

Ans 2) B. A long Bond and a Short Call.

A Callable Bond gives the Issuer the right to purchase the bond before it maturity. It is also referred as Redeemable Bonds.