Question
Your Margin account have $400 in cash. Price of the stock is $10 per share. Earlier bought a stock with 50% margin allowed by your
Your Margin account have $400 in cash. Price of the stock is $10 per share. Earlier bought a stock with 50% margin allowed by your broker, and use full margin. The 50% margin: 80 shares can be purchase and $800 is value of your account after the purchase. Now, suppose the broker issues margin call if margin % fall to 25%. The 25% margin: 160 shares can be purchase, $300 is value of your account after the purchase, and stock price will be $6.67 per share.
How much your account will be worth, after broker sells the required amount of securities?
Margin call = 25% is the Minimum margin requirement
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