Question

Assume you purchased 200 shares of GE common stock on margin at $70 per share from your broker. If the initial margin is 55%, how much did you borrow from the broker?

Answer 1

Answer:

the amount borrowed from the broker is $6300.

Explanation:

Number of shares purchased S = 200

Price of share P = $70 per share

Initial Margin M = 55%  

Amount Borrowed = S*P*(1 - M)

                               = 200*70*(1 - 55%)

                               = $6300

Therefore, the amount borrowed from the broker is $6300.