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Franklin Investments buys $8,000 worth of ABC stock priced at $40 per share using 50% initial margin. The broker charges 6% on the margin loan
Franklin Investments buys $8,000 worth of ABC stock priced at $40 per share using 50% initial margin. The broker charges 6% on the margin loan and requires a 30% maintenance margin. In 1 year, the investor has interest payable and gets a margin call. If the broker requires Franklin Investments to top the margin back up to 50% (from 30% at the time of the margin call) then how much cash will need to be injected into the account?
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