Sun Lee Purchased 1,100 Shares of Franklin Metals Stock for $16.80

question 8

Multiple Choice

Sun Lee purchased 1,100 shares of Franklin Metals stock for $16.80 a share. The stock was purchased with an initial margin of 65 percent. The maintenance margin is 30 percent. The stock is currently selling for $17.60 a share. What is the minimum dollar amount of equity that he must have in this stock today to avoid a margin call?

• A) $5,544
• B) $5,621
• C) $5,700
• D) $5,808
• E) $5,973

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Definitions:

Quantity Demanded

The amount of a good or service consumers are willing and able to purchase at a given price level, during a specified period.

Quantity Supplied

The volume of goods or services that manufacturers are ready and able to supply at a specific price point within a set duration.

Excess Supply

A situation where the quantity of a good or service supplied exceeds the quantity demanded at the current price, often leading to a decrease in prices.

Blu-Ray Disc Rentals

The service of lending Blu-Ray discs, which contain high-definition movies or other content, to customers for a temporary period.