Listen to a Business English Dialogue about House call
John: Hi Eva, have you heard about a house call in finance?
Eva: No, I haven’t. What is it?
John: A house call is when a broker demands that a client deposit more money or securities into their account to meet minimum requirements, typically because the value of the securities has decreased.
Eva: Oh, I see. So, it’s a way for brokers to ensure that clients maintain sufficient collateral in their accounts.
John: Exactly. House calls help protect brokers from potential losses and ensure that clients can cover their obligations.
Eva: Are there any consequences if a client fails to meet a house call?
John: Yes, if a client fails to meet a house call, the broker may liquidate some or all of the securities in the client’s account to cover the shortfall.
Eva: I see. So, it’s important for clients to respond promptly to house calls to avoid potential consequences.
John: Yes, it’s crucial for clients to monitor their accounts closely and maintain sufficient funds or securities to meet house calls.
Eva: Can house calls occur frequently?
John: It depends on market conditions and the volatility of the securities in the client’s account. In stable markets, house calls may be less common, but during periods of market turmoil, they can occur more frequently.
Eva: That makes sense. So, market fluctuations can impact the frequency of house calls.
John: Yes, that’s correct. Clients should be prepared for the possibility of house calls and have a plan in place to address them if they occur.
Eva: Are there any ways for clients to avoid house calls?
John: One way is to maintain a conservative investment strategy and avoid overleveraging or investing in highly volatile securities.
Eva: I see. So, prudent risk management can help reduce the likelihood of house calls.
John: Yes, exactly. It’s essential for clients to be mindful of their risk exposure and manage their investments accordingly.
Eva: Thanks for explaining house calls, John.
John: You’re welcome, Eva. If you have any more questions, feel free to ask!