You purchased 200 shares of ABC common stock on margin at $65 per share. Assume

Question

You purchased 200 shares of ABC common stock on margin at $65 per share. Assume the initial margin is 50% and the maintenance margin is 25% and there is no interest on borrowed amount. You will get a margin call if the stock drops below what price?

You sold short 464 shares of common stock at $10 per share. The initial margin is 50%. You must put up how much your own equity?

You sell short 100 shares of company A which are currently selling at $32 per share. You post the 50% margin required on the short sale. If your broker requires a 30% maintenance margin, at what stock price will you get a margin call?

You just bought 200 shares of a stock priced at $45 per share using 50% initial margin. The broker charges 5% annual interest rate on the margin loan and requires a 30% maintenance margin.  One year later stock price dropped to 29 and you recieved margin call, to restore your margin to the initial margin level, how much would you need to deposit?

You short-sell 200 shares of Tommy co. now selling for $37 per share. If you wish to limit your loss to $1,450, you should place a stop-buy order at what price?

You purchased 250 shares of common stock on margin for $50 per share. The initial margin is 65% and the stock pays no dividend. Your rate of return would be how much if you sell the stock at $35 per share. Ignore interest on margin.

Explanation / Answer

1. Loan Amount =200 shares * $65 * 0.5 = $6500

Stock Price when we get margin call

0.25 = (200P $6500)/200P

50P = 200P $6,500

150P = $6,500

P = $43.33

2. Own Equity = 464 shares x $10 per share x 50% = $2320

3.   Equity = 100($32) * 1.5 = $4,800

Stock Price When we get margin call

0.30 = ($4800 100P)/100P

30P = 4,800 100P

130P = 4,800

P = $36.92

4.   

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