Suppose that you borrow 20000 on margin to buy shares in, Ask an Expert

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Suppose that you borrow $20,000 on margin to buy shares in Disney, which is now selling at $40/share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $35/share.

a. What is the remaining margin (%) in your account?

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

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92415109

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