Question
1. An investor buys 500 shares of Unilever at $78 per share on margin. The initial margin requirement is 70%, and the maintenance margin is
1. An investor buys 500 shares of Unilever at $78 per share on margin. The initial margin requirement is 70%, and the maintenance margin is 25%. (a) What is the actual margin if the price drops to $59? (b) Calculate the margin call price. (c) What is the actual margin if the price drops to $27? (d) If the investor had to recover from margin call how many shares he or she needs to sell. (e) If the investor had to recover from margin call how much cash he or she needs to add. (f) If the investor had to recover from margin call how much loan amount he or she needs to recover.
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