In: Finance
You have opened a stock portfolio account with a brokerage firm. You have only purchased stocks of Home Depot. You purchased 200 shares of HD at $178/share.
At what price will you get a margin call if the maintenance margin is 30%? Initial margin = 50%
Margin call price = Share price [(1 - initial margin) / (1 - maintenence margin)]
Margin call price = 178 [(1 - 0.5) / (1 - 0.3)]
Margin call price = 178 [0.5 / 0.7]
Margin call price = 178 * 0.71429
Margin call price = $127.14