The margin requirement is 50% and you purchase 300 shares of a $25 stock

jagguarpaw January 17, 2017 0 Comments

Question: The margin requirement is 50% and you purchase 300 shares of a $25 stock

Suppose that the margin requirement is 50% and you purchase 300 shares of a $25 stock on a margin. There is no interest on the money you borrow, and there is no transaction fee.

  1. If the value of your investment falls by 10%, what is your holding period yield?
  2. Suppose your investment continues to fall, and you get a margin call when the stock price hits $15. What is maintenance margin?