Using the equation to find the margin call price:
[(P)*(1 - Margin %)] / (1 - maintenance margin %)
Why do I plug in .555 for the margin % instead of .444 when the data is:
An investor opens a margin account with an initial deposit of $5,000. He then
purchases 300 shares of a stock at $30. His margin account has a maintenance
margin requirement of 30%.
I guess my question is: Why is the margin % 5000/9000 rather than 4000/9000??
Edited 5 time(s). Last edit at Friday, December 3, 2010 at 04:48PM by mnieman. |