William purchased 1000 shares of stock at a price of $32 a share. He utilized his 50% margin account to make the purchase. What is William's initial equity in this investment?

Question

Quizplus · Accepted Answer

William's initial equity is the amount he paid out of his own pocket, which is 50% of the total purchase. The total purchase is 1000 shares * $32 = $32,000. Therefore, his initial equity is 50% of $32,000, which is $16,000.

William Purchased 1000 Shares of Stock at a Price of $32