1. Margined Long Position

Suppose that an investor establishes a fully margined long position of 500 shares of firm A at a

price of $32 per share. The initial margin is 50 percent.

a. What is the margin in dollars?

b. Show the T account immediately after the investor takes the position. Show the calculations

for the numbers in the T account.

b. If the share price rises to $40 after 4 months, show the T account at that point in time.

c. What is the actual margin at a share price of $40?

d. If the maintenance margin requirement is 30 percent, at what price would the investor receive

a margin call?

e. If stock price rises to $40, can you please compute your HPR? (No margin loan interest, no

transaction cost and no dividend are considered)