You decide to buy 1,200 shares of stock at a price of $84 and an initial...

Question

Question

You decide to buy 1,200 shares of stock at a price of $84 and an initial margin of 80 percent. What is the maximum percentage

business finance

Answer 1

Answer #1

Price range which require margin call:

= Amount borrowed÷(Number of shares-( Number of shares×Maintenance margin %))

= $84×1,200×20%÷(1,200-(1,200×30%))

= $24

Stock price decline 71.43% [($84-$24)/$84]

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Answer 2

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