Question
The margin requirement on a stock purchase is 50%, and the maintenance margin requirement is 30%. You fully use the margin allowed to purchase 1,000
The margin requirement on a stock purchase is 50%, and the maintenance margin requirement is 30%. You fully use the margin allowed to purchase 1,000 shares of JPM at $60. Assume there are no dividends and that the interest rate on the margin loan is 5%. If one year has passed, what share price for JPM could trigger a margin call?
A. $42.86 B. $45.00 C. $48.00 D. $48.33
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
College Accounting, Chapters 1- 15
Authors: James A. Heintz, Robert W. Parry
23rd Edition
0357391942, 9780357391945
