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(a) Suppose you purchase 1500 shares of Google of on margin at $1800 per share. The initial margin is 60% and the maintenance margin is
(a) Suppose you purchase 1500 shares of Google of on margin at $1800 per share. The initial margin is 60% and the maintenance margin is 35%. Calculate the price, when you will get a margin call if the stock price falls below that level. You may assume that stock pays no dividends and ignore interest on the margin loan. (b) Explain the ways, capital allocation process takes place through financial markets. Write a short note on the role of financial markets in the economy.
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