Question
Boris has borrowed $20,000 on margin to buy shares in ABC Inc., which is now selling at $40 per share. Boris account starts at the
Boris has borrowed $20,000 on margin to buy shares in ABC Inc., which is now selling at $40 per share. Boris account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $35 per share.
i) Will Boris receive a margin call? Show your calculation.
ii) How low can the price of ABC shares fall before Boris receive a margin call?
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Financial Mathematics Derivatives And Structured Products
Authors: Chan
1st Edition
9811336954, 978-9811336959
