You Purchased 1,000 Shares of Common Stock on Margin at $30

question 34

Multiple Choice

You purchased 1,000 shares of common stock on margin at $30 per share. Assume the initial margin is 50%, and the stock pays no dividend. What would the maintenance margin be if a margin call is made at a stock price of $24? Ignore interest on margin.

• A) 0.33
• B) 0.375
• C) 0.20
• D) 0.23
• E) 0.25

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Definitions:

Finance Project

A planned undertaking in the field of finance, typically involving investment, funding, or analysis to achieve specific financial objectives.

Pre-Startup Expenditures

Expenses incurred during the formation and planning stages of a business, prior to its official launch or operation.

Financing Costs

Expenses incurred by a company in the process of raising funds, including interest payments, fees, and other charges.

Incremental Working Capital

The additional amount of net working capital that a company needs to invest in a project.