Lauren has a margin account and deposits $50,000 into it. Assume the prevailing margin requirement is 40

Question:

Lauren has a margin account and deposits $50,000 into it. Assume the prevailing margin requirement is 40 percent, interest and commissions are ignored, and the Gentry Wine Corporation is selling at $35 per share.

a. How many shares can Lauren purchase using the maximum allowable margin?

b. What is Lauren's profit (loss) if the price of Gentry's stock i. rises to $45 and Lauren sells the stock? ii. falls to $25 and Lauren sells the stock?

c. If the maintenance margin is 30 percent, to what price can Gentry Wine fall before Lauren will receive a margin call?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...

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