How far can the stock price fall before a margin call

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Reference no: EM131514783

Buying on Margin: Margin Requirements

Assume that a broker’s margin Information is as follows:

Initial Margin: 50%

Maintenance Margin: 30%

An investor wants to purchases 100 shares of X Corp on margin.

The current price is $30/share

a. How much cash (equity) does he need minimally? How much can he borrow from broker maximally?

b. How far can the stock price fall before a margin call?

Reference no: EM131514783

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