Question
In: Finance
At what price will you get a margin call if the maintenance margin is 30%? Initial margin = 50%
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%
Solutions
Expert Solution
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
jeff jeffy answered 2 years agoRelated Solutions
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Given the following information, The margin requirement=50%. The margin call ratio = 30%. Stock price: $...
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Stock price: $ 60
Interest rate on margin borrowing (call rate): 5%
Expected dividend: $2
Holding period: 1 year
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