Youve borrowed exist20000 on margin to buy shares in abc


Youve borrowed exist20,000 on margin to buy shares in ABC, which is now selling at exist40 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 S35 per share.

a. Will you receive a margin call?

b. How low can the price of ABC shares fall before you receive a margin call?

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Financial Management: Youve borrowed exist20000 on margin to buy shares in abc
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