You have $30,000 to invest and you have decided to buy IBM on margin. Your broker...
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You have $30,000 to invest and you have decided to buy IBM on margin. Your broker requires an initial margin of 60% and a maintenance margin of 40%. Currently, Shake Shack is trading for $160 per share. a. Approximately how many shares can you buy in total? b. If the price drops to $140 per share, will you receive a margin call? c. How far can the price fall before your broker issues a margin call? You have $30,000 to invest and you have decided to buy IBM on margin. Your broker requires an initial margin of 60% and a maintenance margin of 40%. Currently, Shake Shack is trading for $160 per share. a. Approximately how many shares can you buy in total? b. If the price drops to $140 per share, will you receive a margin call? c. How far can the price fall before your broker issues a margin call? You have $30,000 to invest and you have decided to buy IBM on margin. Your broker requires an initial margin of 60% and a maintenance margin of 40%. Currently, Shake Shack is trading for $160 per share. a. Approximately how many shares can you buy in total? b. If the price drops to $140 per share, will you receive a margin call? c. How far can the price fall before your broker issues a margin call?
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a With an initial margin requirement of 60 you will need to put down 60 of the total value of the in... View the full answer
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