Exhibit 4.1
Use the Information Below for the Following Problem(S)
Jackie has a margin account with a balance of $150,000. The initial margin deposit is 60 percent and Turtle Industries is currently selling at $50 per share.
-Refer to Exhibit 4.1.If the maintenance margin is 25 percent,to what price can Turtle Industries fall before Jackie receives a margin call?
A) $14.56
B) $23.17
C) $32.42
D) $26.67
E) None of the above

Question

Quizplus · Accepted Answer

Margin = (Market Value - Debit Balance)¸ Market Value,where
Debit Balance = initial loan value = ($250,000 - $150,000)= $100,000
Market Value = Price × Number of Shares = 5000P
Thus 0.30 = (5000P - $100,000)¸ (5000P)
P = $26.67

Exhibit 4.1 Use the Information Below for the Following Problem(S)