Archegos-inspired margin buying question. Suppose that Archegos bought the equivalent of $1bn of Viacom Class B shares at the beginning of March at a price of $62.50 per share. a. If Archegos had been subject to the Federal Reserves Initial Margin requirement of 50%, how much own capital would they have had to put up to make this trade? According to news reports, brokers were in fact willing to lend Archegos much more money: for the remainder of this question, suppose that Archegos put up $100 million of its capital and brokers provided the remaining $900 million.

b. VIACs price peaked on March 22, 2021, at $100.34. What was Archegoss percentage margin at this peak price, assuming that they initially put up $100 million (as mentioned in a.)? Had they sold at this price, what would have been Archegoss return on investment?

c. In the days after March 22, VIACs price went into free fall (see below). In particular, the price dropped from $66.35 on March 25 to $48.23 on March 26. Assuming a maintenance margin of 5%, at what price would Archegos have received a margin call?