Yvette recently purchased 500 shares of stock at a cost per share of $34.50. The initial margin requirement on this stock is 75% and the maintenance margin is 40%. The stock is currently valued at $36.75 a share. What is her current margin position? Ignore margin interest.

Question

Quizplus · Accepted Answer

The current margin position is calculated as (Current Value of Shares - Loan) / Current Value of Shares. The current value is 500 shares * $36.75 = $18,375. The initial investment was 75% of 500 shares * $34.50 = $12,937.50, so the loan was $18,375 - $12,937.50 = $5,437.50. The margin position is ($18,375 - $5,437.50) / $18,375 = 76.53%.

Yvette Recently Purchased 500 Shares of Stock at a Cost