Question: Pat Delmonico opens a new margin account with an initial margin requirement of m and a maintenance margin requirement of (m-.2). He uses the account
Pat Delmonico opens a new margin account with an initial margin requirement of m and a maintenance margin requirement of (m-.2). He uses the account to purchase stock for $24,512, borrowing to the full extent allowable. At what price is the maintenance margin first violated, assuming that there is no interest or dividends paid to or from the margin account?
Answer should be 24512(1-m)/(1.2-m)
Please show work thanks!
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
