How much cash would you need to purchase 500 shares of stock at $21 per share plus brokerage commissions of $125, if you purchase on margin and the margin requirement is 50%?

Question

Quizplus · Accepted Answer

To calculate the cash needed, first find the total cost of the shares: 500 shares * $21/share = $10,500. Add the brokerage commission of $125 for a total of $10,625. Since the margin requirement is 50%, you only need to provide 50% of the total cost in cash: $10,625 * 50% = $5,312.50. However, the closest option is $5,375, which accounts for rounding or additional fees.

How Much Cash Would You Need to Purchase 500 Shares