Question
Based on your continued assessment of the stock you believe it may prudent to purchase shares in London Fund Managers Corporation. Therefore on February 1,
Based on your continued assessment of the stock you believe it may prudent to purchase shares in London Fund Managers Corporation. Therefore on February 1, 2014 you opened a margin account buying 200,000 shares at $23 per share. The initial margin requirement is 55% and the maintenance margin is 25%.On April 1, the media reported that a rogue trader at London Fund Managers Corporation had cost the company significant losses(amounting to approximately 50% of its capital base). As a result the stock price fell to $8.00 per share.
(i) At what price did you receive a margin call? (Assume you borrow as much as possible to open the account)
(ii) How much cash would you need to add to your account if you are required to restore the initial margin of 55%
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