Solved: How can price of disney shares fall receive a margin call, Finance Basics

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How can price of disney shares fall receive a margin call

Assignment:

You have borrowed $20,000 on margin to buy shares in Disney, which is now selling at $80 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $75 per share.

(a) Will you receive a margin call?

(b) How low can the price of Disney shares fall before you receive a margin call?

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Finance Basics: How can price of disney shares fall receive a margin call

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Finance Basics: How can price of disney shares fall receive a margin call

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