You bought on margin 200 shares of AMC Entertainment stock at $4 per share. The initial margin requirement is 60%. The maintenance margin requirement is 30%. Suppose the stock value increases to $15 per share 1 month later:

a. What is your margin account balance (in dollars)?

b. Over that month, the stock pays a $0.10 dividend. If you close your position on the stock, what is your return on the investment?

c. Instead of closing your position, you decide to keep riding the price up. A broker allows you to withdraw funds from your margin account as long as you maintain the minimum margin amount. What is the most you can withdraw from your margin account and still meet the maintenance margin requirements?

Answer rating: 100% (QA)

a Margin Account Balance Number of shares 200 Share price 15 Account balance w... View the full answer