Question

You purchase 600 shares of 2nd Chance Co. stock on margin at a price of $28. Your broker requires you to deposit $10,000.

1. What is your margin loan amount? (Do not round intermediate calculations. Omit the "$" sign in your response.) Margin loan $
2. What is the initial margin requirement? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Margin requirement %

Answer 1

Answer:

Explanation:

1) Margin loan amount = Value of stock - Initial Deposit

Value of stock = $600*$28 = $16,800

Margin loan amount = $16,800 - $10,000 = $6,800

2) Margin requirement = Initial Deposit/Value of stock

Margin requirement = $10,000/$16,800 = 59.52%