Youve borrowed $20,000 on margin to buy shares in Disney, which is now selling at $40 per

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You’ve borrowed $20,000 on margin to buy shares in Disney, which is now selling at $40 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $35 per share.

a. Will you receive a margin call?

b. How low can the price of Disney shares fall before you receive a margin call?

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Investments

ISBN: 9780073530703

9th Edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

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Question Posted: Jan 04, 2013 08:09 AM

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Youve borrowed $20,000 on margin to buy shares in Disney, which is now selling at $40 per

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a You will not receive a margin call You borrowed 20000 and with another 20000 of you...View the full answer

Investments

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