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(A)
Adequate information
The investor borrowed $20,000 to purchase shares of Worley. The price at which the stock is currently prevailing accounts for $40. The initial requirement of margin is 50%. The maintenance margin accounts for 35%. There is a fall in price of share after two days and accounts for $35 per share.
To determine:
Whether the investor will receive the margin call
Introduction:
The margin in the trading account refers to the minimum amount of money, which the investor is required to maintain in his account in the form of margin for placing a trade order.
(B)
To calculate:
The price of the stock that enables the investor to get margin call
Introduction:
Margin call comes into picture when the investor is required to deposit additional securities or money so that the margin in the investor's account stands equivalent to the minimum margin requirement.
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EBK ESSENTIALS OF INVESTMENTS
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
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