Answer: 2.86.

## Explanation The leverage ratio is calculated as: **Leverage Ratio = 1 / Margin Requirement** Given: - Minimum margin requirement = 35% = 0.35 **Calculation:** Leverage Ratio = 1 / 0.35 = 2.857 ≈ 2.86 **Why this is correct:** 1. The margin requirement represents the percentage of the total investment that must be provided by the investor's own funds. 2. If the margin requirement is 35%, the investor can borrow 65% of the investment. 3. The leverage ratio shows how much total investment can be controlled per dollar of equity. 4. With 35% margin, for every $1 of equity, the investor can control approximately $2.86 of investment ($1/0.35). **Verification:** - If an investor has $35 of equity and borrows $65, total investment = $100 - Leverage ratio = Total investment / Equity = $100 / $35 = 2.857 ≈ 2.86 Therefore, option C (2.86) is the correct answer.

Author: LeetQuiz .