Michael purchased 1000 shares of stock at a price of $16 a share.He utilized his 50% margin account to make the purchase.What is Michael's initial equity in this investment?

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Quizplus · Accepted Answer

Michael's initial equity is the amount he personally invested. Since he used a 50% margin, he paid for half of the total purchase price himself. The total cost is 1000 shares * $16 = $16,000. Therefore, his initial equity is 50% of $16,000, which is $8,000.

Michael Purchased 1000 Shares of Stock at a Price of $16