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Compute the return on investment

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Question - You have borrowed $24,000 on margin to buy shares in Bubble Dot Company, which is now selling at $60 per share. Your account starts at the initial margin requirement of 60%. The maintenance margin is 30%. Two days later, the stock price falls to $45 per share. The margin account does not charge any interest.

Required -

(a) Compute the return on investment

(b) Will you receive margin call?

(c) How low can the price of Bubble Dot Company shares fall before you receive a margin call?

Reference no: EM133164174

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