Question

Assume you purchased 219 shares of Tesla common stock on margin at $75 per share from your broker, and this was the maximum you could purchase given your wealth. If the initial margin is 41%, how much did you borrow from the broker? Enter your answer in numerical form WITHOUT a dollar sign or commas, rounded to the nearest dollar (i.e., enter 3501 not $3,500.92).

Answer 1

Answer:

$6,734

Explanation:

The computation of the borrowed amount is shown below:

= Number of shares purchased × margin per share × (1 - initial margin)

= 219 shares × $75 × (1 - 0.41)

= $16,425 × (1 - 0.41)

= $6,734

For computing the borrowed amount we multiplied the number of shares purchased with the margin per share after considering the initial margin