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You opened a margin account with a local brokerage firm. The initial margin is 60% and the maintenance margin is 30%. You bought 1000 shares
You opened a margin account with a local brokerage firm. The initial margin is 60% and the maintenance margin is 30%. You bought 1000 shares of XYZ at $80 /share on the margin.
1) What are the initial equity position and loan balance?
2. How far can the price go down before you receive a margin call?
3. If the price dropped suddenly to $45. How much cash should be added to the account to restore the margin?
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