Question
Suppose that you just purchased 50 shares of Beta Bananas stock for $30 per share. The initial margin requirement is 54.5%, which means the amount
Suppose that you just purchased 50 shares of Beta Bananas stock for $30 per share. The initial margin requirement is 54.5%, which means the amount borrowed is $682. The corresponding balance sheet is below:
a. Now suppose the price of the stock falls to $53 per share. What is your current margin percentage? (Round your answer to 2 decimal places.)
b. Construct the balance sheet to show the current situation. (Round your answers to 2 decimal places.)
c. If the maintenance margin is 65%, what is the highest stock price that will trigger a margin call? (Round your answer to 2 decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started