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Please show me the detail instructions of these question. The current initial margin requirement set by Fed is 50%. Suppose the maintenance margin set by

Please show me the detail instructions of these question.

The current initial margin requirement set by Fed is 50%. Suppose the maintenance margin

set by the broker is 40%.

Suppose that an investor pays $5,500 towards the purchase of $10,000 worth of stock (200

shares at $50 per share), borrowing the remaining $4,500 from the broker.

(1) Calculate the initial margin. Is the initial margin requirement met?

(2) Suppose that the stock price declines to $40 per share. What is the new margin? Will

this price drop initiate a margin call and why?

(3) Suppose that the stock price declines to $35 per share. What is the new margin? Will

this price drop initiate a margin call and why?

(4) How far could the stock price fall before the investor would get a margin call?

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