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You purchased 500 shares of Dell common stock on margin at $25 per share. Assume the initial margin is 50% and the maintenance margin is
You purchased 500 shares of Dell common stock on margin at $25 per share. Assume the initial margin is 50% and the maintenance margin is 20%. Following the disastrous rollout of their newest laptop, the price of Dell starts declining rapidly. If the price declines to $15, what is your new margin and do you receive a margin call? Assume the stock pays no dividends and ignore interest on margin. A) 16.67%, margin call B) 16.67%, no margin call C) 66.67%, margin call D) 66.67%, no margin call E) None of the above
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