Question
You want to buy 100 shares of Xilinx Inc. (NASDAQ: XLNX). The market price is $69. The initial margin requirement is 50%. The maintenance margin
You want to buy 100 shares of Xilinx Inc. (NASDAQ: XLNX). The market price is $69. The
initial margin requirement is 50%. The maintenance margin requirement is 30%. You want to get
the following information before you make an investment decision.
How much equity you must have in the account to initiate the position?
At what price will you get a margin call?
If the price of the stock falls to $45, what is the equity balance and margin ratio in the margin
account? How much funds you need to deposit to meet the margin requirement?
If you dont have extra funds to deposit, how many shares of XLNX
the broker will have to liquidate to maintain the margin account. Show the new balance sheet.
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