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14 May, 11:27

You purchased 100 shares of common stock on margin at $60 per share. Assume the initial margin is 60% and the stock pays no dividend. What would the maintenance margin be if a margin call is made at a stock price of $40? Ignore commission and interest on margin.

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  1. 14 May, 11:47
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    The answer is 0.46

    Explanation:

    Firstly, 100shares x $60 x0.6

    =$3,600

    Step 2:

    $3,600 x 0.6

    =$2,160

    Step 3:

    100 x $40 - $2,169/100 x$40

    $4,000 - $2,160/$4,000

    $1,840/$4,000

    0.46
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