Question

You have $86,000 and decide to invest on margin. If the initial margin requirement is 50 percent, what is the maximum dollar purchase you can make?

Answer 1

Answer:

$172,000

Explanation:

Given that,

A person having a amount today for investment = $86,000

Initial margin requirement = 50 percent

Therefore,

Maximum dollar purchase he can make is as follows:

= Amount of money available ÷ Initial margin requirement

= $86,000 ÷ 50%

= $86,000 ÷ 0.50

= ($86,000 × 100) ÷ 50

= $172,000

Therefore, the maximum amount of dollar purchase is $172,000.