You've 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.

1. Will you receive a margin call?

2. 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: Jul 29, 2013 12:27 AM

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

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1 The initial margin requirement is 50 which implies that if you borrowed 20000 to buy Disney shar...View the full answer

Investments

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