Assume you have a margin account with a 50% initial margin.You purchase 100 shares of stock at $80 per share.The price increases to $100 per share.What is the net value of your investment (margin)now?
A)$10,000
B)$8,000
C)$6,000
D)$5,000
E)$2,000

Question

Quizplus · Accepted Answer

The initial investment is 100 shares at $80 per share, totaling $8,000. With a 50% initial margin, you would have put down $4,000 of your own money. When the stock price increases to $100 per share, the total value of the shares becomes $10,000. The net value of your investment (margin) now is the current value of the shares ($10,000) minus the amount borrowed ($4,000), which equals $6,000.

Assume You Have a Margin Account with a 50% Initial