Question

Suppose that Intel currently is selling at $50 per share. The rate on margin loan is 8%. Investor A purchased 100 shares using 60% margin. Investor B sold 100 shares using 60% margin. The maintenance margin is 40%.

1. Calculate the margin call price for Investor A

2. Calculate the margin call price for Investor B

Answer 1

1.
(100*P-50*100*(1-60%))/(100*P)<=40%
=>60*P<=50*100*(1-60%)
=>P<=50*100*0.40/60
=>P<=33.33333

2.
(100*50+100*50*60%-100*P)/(100*P)<=40%
=>140*P>=(100*50+100*50*60%)
=>P>=(100*50+100*50*60%)/140
=>P>=57.14286