You purchased stock worth $10 000 on margin (50 percent).Now the value of your stock has declined to $7000 and you receive a margin call.How much cash do you need to bring the margin back to the minimum level?

Question

Quizplus · Accepted Answer

The initial investment was $10,000 with 50% margin, meaning you borrowed $5,000. The stock value is now $7,000, so your equity is $2,000 ($7,000 - $5,000). To maintain a 50% margin, your equity should be $3,500 (50% of $7,000). Therefore, you need to add $1,500 to your account to meet the margin requirement.

You Purchased Stock Worth $10 000 on Margin (50 Percent)