Question

Item 24Item 24 Assume you purchased 500 shares of XYZ common stock on margin at $40 per share from your broker. If the initial margin is 60%, the amount you borrowed from the broker is _________.

Answer 1

Answer:

$8,000

Explanation:

The computation of the borrowed amount from the broker is shown below:

= Number of shares purchased × margin per share × remaining margin

= 500 shares × $40 per share × 40%

= $8,000

The remaining margin would be

= 100% - 60%

= 40%

In order to find out the borrowed amount we multiplied the number o shares purchased with the margin per share and the remaining margin so that the accurate value could come