Yvette Recently Purchased 500 Shares of Stock at a Cost

question 54

Multiple Choice

Yvette recently purchased 500 shares of stock at a cost per share of $43.50.The initial margin requirement on this stock is 75 percent and the maintenance margin is 40 percent.The stock is currently valued at $44.75 a share.What is her current margin position? Ignore margin interest.

• A) 74.29 percent
• B) 74.78 percent
• C) 75.70 percent
• D) 76.03 percent
• E) 76.14 percent

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Definitions:

Investment

The allocation of resources, usually money, in the expectation of generating an income or profit.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares, rather than cash.

Retained Earnings

The portion of a company's profits that is held or retained and not paid out as dividends to shareholders.

Shareholder Wealth

The overall value for shareholders; it is often measured by the share price of a company multiplied by the number of shares outstanding.