Question

Donna recently purchased 500 shares of Deltona stock for $33.00 a share. Her broker required a cash payment of $10,725, plus trading costs, for the purchase. What is the initial margin requirement on this particular stock?

Answer 1

Answer:

65 percent

Explanation:

Given that,

Value of investment:

= Shares purchased × Price per share

= 500 × $33

= $16,500

Initial margin = Cash ÷ Investment

                     = $10,725 ÷ $16,500

                     = 0.65 or 65%

Therefore, the initial margin requirement on this particular stock is 65 percent.