Tomas purchased on margin 100 shares of stock in the Marshall Manufacturing for $50 per share yesterday. Today, the price of the shares dropped by $20 per share. Tomas expects his broker to issue a margin call.

Question

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Buying on margin involves borrowing some of the stock purchase cost from the brokerage firm. If the investor's account goes down in market value, the broker will issue a margin call requiring the investor to come up with more money to cover the losses the stock has suffered. Margin calls require an investor to repay a significant portion of the loss within days or even hours.

Tomas Purchased on Margin 100 Shares of Stock in the Marshall