Rosita purchased 500 shares of a stock for $25 a share. Today, the stock is selling for $30 a share. The initial margin requirement is 65% and the maintenance margin is 30%. Rosita had to pay ________ in cash to purchase the stock and must have at least ________ in equity today.

Question

Quizplus · Accepted Answer

Rosita had to pay 65% of the purchase price in cash: 500 shares * $25/share * 65% = $8,125. The minimum equity required today is 30% of the current value: 500 shares * $30/share * 30% = $4,500.

Rosita Purchased 500 Shares of a Stock for $25 a Share