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You purchased 100 shares of Apple common stock on margin at $100 per share. Assume the initial margin is 60% and the maintenance margin is 40%. (Assume the stock pays no dividends, and ignore interest on the margin loan.) (a) At what price will you get a margin call? (b) What is your return when you get a margin call?

You purchased 100 shares of Apple common stock on margin at $100 per share. Assume the initial margin is 60% and the maintenance margin is 40%. (Assume the stock pays no dividends, and ignore interest on the margin loan.) (a) At what price will you get a margin call? (b) What is your return when you get a margin call?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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You purchased 100 shares of Apple common stock on margin at $100 per share. Assume the initial margin is 60% and the maintenance margin is 40%. (Assume the stock pays no dividends, and ignore interest on the margin loan.) (a) At what price will you get a margin call? (b) What is your return when you get a margin call?
Transcribed Image Text:You purchased 100 shares of Apple common stock on margin at $100 per share. Assume the initial margin is 60% and the maintenance margin is 40%. (Assume the stock pays no dividends, and ignore interest on the margin loan.) (a) At what price will you get a margin call? (b) What is your return when you get a margin call?
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