Question
4. Buying on Margin: Margin Requirements Assume that a brokers margin Information is as follows: Initial Margin: 50% Maintenance Margin: 30% An investor wants to
4. Buying on Margin: Margin Requirements
Assume that a brokers margin Information is as follows:
Initial Margin: 50%
Maintenance Margin: 30%
An investor wants to purchases 100 shares of X Corp on margin.
The current price is $30/share
a. How much cash (equity) does he need minimally? How much can he borrow from broker maximally?
b. How far can the stock price fall before a margin call?
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Essentials Of Managerial Finance
Authors: Scott Besley, Eugene F. Brigham
12th Edition
0030258723, 9780030258725
