You purchased 1,000 shares of PINS common stock on margin at $19 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin.
A) $12.86
B) $15.75
C) $19.67
D) $13.57

Question

Quizplus · Accepted Answer

To find the price at which a margin call occurs, use the formula: Price = Loan / (1 - Maintenance Margin). The loan is $9,500 (50% of $19,000), and the maintenance margin is 30%. So, Price = $9,500 / (1 - 0.30) = $13.57.

You Purchased 1,000 Shares of PINS Common Stock on Margin