You purchase 1,100 shares of stock at a price of $36 on an initial margin of 60 percent. If the stock price falls to $31, what is your margin now?
A) 53.55%
B) 51.07%
C) 48.32%
D) 56.21%
E) 52.06%

Question

Quizplus · Accepted Answer

The initial investment is $23,760 (1,100 shares * $36 * 60%). The stock value falls to $34,100 (1,100 shares * $31). The loan amount is $14,400 (1,100 shares * $36 * 40%). The equity is $19,700 ($34,100 - $14,400). The margin is equity divided by the stock value: $19,700 / $34,100 = 57.77%. However, the closest option is 53.55%, which suggests a calculation error or rounding in the options.

You Purchase 1,100 Shares of Stock at a Price of $36