Question: You had a margin account with $5,000 equity. Together with the $5,000 you borrowed from your broker, you purchased 100 shares of IBM stocks at

You had a margin account with $5,000 equity. Together with the $5,000 you borrowed from your broker, you purchased 100 shares of IBM stocks at $100 per share.

a. Assume 30% maintenance margin. If you do not want to liquidate your stocks, how much money do you need to deposit to maintain the margin requirement? Assume your new deposit is used to pay down the liability in the margin account.

b. If you do not have extra money, so that you have to sell your IBM stocks. At least how many stocks do you need to sell to maintain the margin requirement? Ignore any transaction costs, such as bid ask spread.

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