: Sep 7 at 10:52pm z Instructions Question 1 2 pts Consider these facts: The cur

Question

: Sep 7 at 10:52pm z Instructions Question 1 2 pts Consider these facts: The current Minimum Initial Margin requirement is 50%. . Maintenance Margin requirements are 30%. You buy 1,000 shares of Acme Enterprises for a price of $50 per share, using the maximum amount of borrowed money allowable. The day after you buy, the stock price rises to $60 per share. On the second day it drops to $40 per share. With the stock at $40 per share now; How many more whole shares of stock can you now buy without adding any money to your account? As always, enter the whole number of shores without any punctuation You carinot buy partial shares

Explanation / Answer

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Solution :- The initial margin = 50% The number of shares we can buy is 1000 of $50 each Therefore the maximum borrowed amount is 1000*50*50% = 25000 Next day price of share is $60 The notional profit is of amount 1000*{60-50} = 10000 Now the Balance in account is of 10000 + 25000 = 35000 Now the price drop to $40 The Notional loss is of amount 1000*(60-40) 20000 Now the balance in account is of 35000-20000 = 15000 Now the whole no. of share he can buy without adding money is = 15000/(50%*40) 750 shares

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