Answer:
Maintenance margin at $60=[tex]\frac{\$8000-\$6000}{\$6000} =0.333=33.3\%[/tex]
Explanation:
Given Data:
Number of shares=100 shares
Cost per share=$50
Initial margin=60%=0.6
Required:
The maintenance margin if a margin call is made at a stock price of $60=?
Solution:
Cost of shares=100*50=$5000
Cost with initial margin=$5000*0.6=$3000
Total cost of shares=$5000+$3000=$8000
Cost of shares at $60=100*60=$6000
Maintenance margin at $60=[tex]\frac{Total\ cost\ of\ shares-Cost\ of\ shares\ at\ \$60}{Cost\ of\ shares\ at\ \$60}[/tex]
Maintenance margin at $60=[tex]\frac{\$8000-\$6000}{\$6000} =0.333=33.3\%[/tex]
