USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Jackie has a margin account with a balance of $150,000. The initial margin deposit is 60 percent and Turtle Industries is currently selling at $50 per share.
-Refer to Exhibit 3.1. What is Jackie's profit/loss if Turtle's price after one year is $40?
A) $50,000
B) -$50,000
C) $100,000
D) -$100,000
E) $40,000

Question

Quizplus · Accepted Answer

Jackie initially buys 5,000 shares ($150,000 / 60% / $50). If the price drops to $40, the value of shares is $200,000 (5,000 * $40). The loss is $50,000 ($250,000 initial value - $200,000 current value).