Question

You’ve borrowed $26,838 on margin to buy shares in Company BBYT, which is now selling at $42.6 per share. You invest 1,260 shares. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. At what price will you receive a margin call?

Answer 1

the price that received a margin call is $32.77

Step-by-step explanation:

The computation of the price that received a margin call is shown below:

= Borrowed amount ÷(Number of shares - ( Number of shares × Maintenance margin %))

= $26,838 ÷ (1,260 shares - (1,260 × 35%))

= $32.77

Hence, the price that received a margin call is $32.77

We simply applied the above formula and the same is to be considered