Final answer:
A broker-dealer contacting a margin account client to demand additional funds is known as a margin call, which occurs when the account value falls below the maintenance margin. Reg. T call is related to the initial margin requirement for purchasing securities on margin. correct answer is option 2
Step-by-step explanation:
The term used to describe a broker-dealer contacting a margin account client with a demand for additional funds is called a margin call. This happens when the value of the investor's margin account falls below the broker's required amount, which is known as the maintenance margin. To satisfy the margin call, the investor must either deposit more money into the account or sell some of the assets held in the account.
Reg. T call refers to the Federal Reserve Board's Regulation T which governs the amount of credit that brokers and dealers can provide to clients for the purchase of securities. A Reg. T call usually occurs when an investor initially buys securities on margin and needs to meet the initial margin requirement set by Regulation T.
The practice of buying on margin allows individuals to leverage their investments and control larger amounts of securities than they could with their own capital alone. However, it also increases the investor's potential for both gains and losses, making it a risky strategy.