You own 400 shares of a stock that you purchased on margin at a price per share of $20.74. The stock is currently valued at $20 a share. Your broker advised you that your minimum equity position for this purchase is $2,800 as of today. What is the maintenance margin percentage?
A)25%
B)30%
C)35%
D)40%
E)50%

Question

Quizplus · Accepted Answer

First, we need to calculate the total cost of the investment: 
400 shares * $20.74 per share = $8,296

Then, we need to determine the minimum equity position: 
$2,800 / $8,296 = 0.3375 or 33.75%

Finally, we can calculate the maintenance margin percentage: 
100% - 33.75% = 66.25%

Therefore, the maintenance margin percentage is 35% (choice C).

You Own 400 Shares of a Stock That You Purchased