You made a $10 000 stock purchase on margin (50 percent). You put $5000 into your account initially to cover the purchase. Your stock has declined in value to $7000 and you receive a margin call. How much cash must you put into your account as a result of the margin call?

Question

Quizplus · Accepted Answer

The initial margin requirement is 50%, so you borrowed $5000. With the stock now worth $7000, your equity is $2000 ($7000 - $5000). To meet the 50% margin requirement on the $7000 value, you need $3500 in equity. Therefore, you need to add $1500 more to your account.

You Made a $10 000 Stock Purchase on Margin (50