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You want to buy 800 shares of stock priced at $120 per share. Initial margin requirement is 75%. Maintenance margin requirement is 40%. a. What
- You want to buy 800 shares of stock priced at $120 per share. Initial margin requirement is 75%. Maintenance margin requirement is 40%.
- a. What is the value of your risky position?
- b. How much of your own funds do you have to provide?
- c. If the stock price goes up 10% what will be your return?
- d. At which price will you face margin call?
- e. After facing a margin call, how much cash you will need to contribute to restore initial margin?
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
7th Edition
013213683X, 978-0132136839
