You purchase 200 shares of LPT Company at $100 per share using a 60% margin

Finance Dec 09, 2020

You purchase 200 shares of LPT Company at $100 per share using a 60% margin. The minimum initial margin is 50% and your maintenance m n is 25%. How low can the stock price fall before you receive a margin call? $51.85 Correct Answer $53.33 You Answered $54.37 $49.64.

Expert Solution

Answer:- $53.33

Explanation

200 shares × $100 /(100%+50%) = $20000 /1.50= $13333 (loan amount)

0.25 =( 13333-200P)/200P
50P= 13333 -200P
250P=13333

P=13333/250 = 53.33

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