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Suppose that you just purchased 100 shares of Beta Banana's stock for $40 per share. The initial margin requirement is 54.5%, which means the amount
Suppose that you just purchased 100 shares of Beta Banana's stock for $40 per share. The initial margin requirement is 54.5%, which means the amount borrowed is $1,820. The corresponding balance sheet is below: Assets Stock $4,000.00 Liabilities and Equity Loan from broker Equity Total liabilities and equity $1,820.00 $2,180.00 $4,000.00 Total assets 4,000.00 a. Now suppose the price of the stock falls to $29 per share. What is your current margin percentage? (Round your answer to 2 decimal places.) Margin percentage % b. Construct the balance sheet to show the current situation. (Round your answers to 2 decimal places.) Assets Liabilities and Equity Loan from broker Stock Equity Total liabilities and equity Total assets c. If the maintenance margin is 35%, what is the highest stock price that will trigger a margin call? (Round your answer to 2 decimal places.) Price
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