You opened a margin account with borrowing $50,000 from your broker a year ago. Your account started at the initial margin requirement of 50%. With the margin account you bought ABC stock at $50 per share. The maintenance margin is 35%. Today, the stock price falls to $45 per share. Assume interest rate is 10%. What is the margin (your equity) in your account when you first purchase the stock?

Will you receive a margin call? (Please consider interest expenses and Show percentage margin after price falls)

How low can the price of ABC shares fall before you receive a margin call? Please show both with and without interest expenses.

What is your rate of return (Consider Interest Expenses)?

Answer rating: 100% (QA)

To calculate the margin equity in your account when you first purchased the stock we need to determine the initial investment Initial investment Total ... View the full answer