Homework Answers
Answer:
fter a year, value of borrowed money = 38750 x (1 + 6%) = $41075
Margin call occurs when the percentage of equity becomes 35%. Let's assume that you get a margin call at Price P.
=> 500 x P x 35% = 500 x P - 41075
=> P = 41075/ (500 - 500 x 35%) = $126.38
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