Question
At the beginning of the day, you purchased 400 shares of stock for $36 a share. The initial margin requirement is 60 percent. Unless otherwise
At the beginning of the day, you purchased 400 shares of stock for $36 a share. The initial margin requirement is 60 percent. Unless otherwise stated, assume that for purchasing the shares your borrowed amount is the maximum allowed borrowing. You are also given that the maintenance margin is 40 percent. At the end of the day, the closing price of stock is $23.04 a share. Will you receive a margin call? If yes, then assume that you took care of the margin call by bringing some additional funds ($X) from your checking account and using this amount as a security deposit. What is the amount of the additional fund, X? Prepare the balance sheet after you have taken care of the margin call.
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