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If margin call is not met within 5 business days for a day trader, then what will happen?

1) The day trader will be charged a penalty fee
2) The day trader's account will be frozen
3) The day trader will be required to deposit additional funds
4) The day trader will be banned from trading

User Pereira
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1 Answer

3 votes

Final answer:

If a day trader does not meet a margin call within 5 business days, they will be required to deposit additional funds to cover the margin deficiency. The correct option is 3.

Step-by-step explanation:

If a margin call is not met within 5 business days for a day trader, the day trader will be required to deposit additional funds. A margin call occurs when the value of securities held in a trading account falls below the minimum required margin. The day trader is responsible for maintaining adequate margin levels to cover potential losses. If the margin call is not met within the specified time frame, the broker will require the day trader to deposit additional funds to bring the account back to the minimum margin requirement.

It is important for day traders to carefully monitor their margin levels and take prompt action to meet margin calls to avoid risks such as account liquidation. Depending on the terms of the brokerage agreement, the day trader may also be subject to penalty fees or account restrictions if they fail to meet margin calls in a timely manner.

Hence, Option 3 is correct.

User Mohammad Farhadi
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