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FinanceQ&A LibraryYou’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?Question

Asked Mar 6, 2020

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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?

Step 1

**a)**

The person X might not receive a margin call. Person X hired out $20000 and with another $20000 of his own equity he subscribed 1000 shares of lxnay at $ 40 per share. At $35 per share, the market worth of stock is $35000, person X’s equity is $15000 and the percentage of margin is:

Person X’s margin percentage is more than the mandatory...

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