You've borrowed $20,000 on margin to buy shares in ixnay, which is now selling at $40 per share. your account starts at the initial margin requirement of 50%. the maintenance margin is 35%. two days later, the stock price falls to $35 per share.

a. will you receive a margin call?

b. how low can the price of ixnay shares fall before you receive a margin call?

a. will you receive a margin call?

No you wouldn't. You borrowed $20,000 on the margin which means that you invested $20,000 of your own money. You purchased 1,000 stocks (= $40,000 / $40) of ixnay at $40, and now the stock price is $35. This means that you lost $5,000, and you percentage on the margin = $15,000 / $35,000 = 43%. Since the maintenance margin is 35%, you are still in.

b. how low can the price of ixnay shares fall before you receive a margin call?

we can use the following formula = (1,000price - $20,000)/1,000price = 35%

350price = 1,000price - $20,000

$20,000 = 1,000price - 350price = 650price

price = $20,000/650 = $30.769 ≈ $30.77 or lower

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

your welcome leave a rate and a < 3

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