Imagine that you buy 1000 shares of ABC, Inc. for $28 per share. Further imagine that you pay $18,000 to buy such shares on margin, and borrow the remaining $10,000 from a broker.
What is the initial margin related to the transaction ?
If the stock decline to $25per share. what would the equity value of your account be ?
Imagin that there is a Maintainance Margin of 50% ont the account. how would the price of the stock to trigger a Margin Call ?
If the stock price fall to $16 per share. how much money would you have to deposit to bring the margin up to 50% ?