In our previous example (Example 2.3), suppose the maintenance margin was 40 percent. At what price per share would you have been subject to a margin call?

Example 2.3

A year ago, you bought 300 shares of Coca-Cola Co. (KO) at $55 per share. You put up the 60 percent initial margin. The call money rate plus the spread you paid was 8 percent. What is your return if the price today is $50? Compare this to the return you would have earned if you had not invested on margin.