Exhibit 4.2
Use the Information Below for the Following Problem(S)
Heidi Talbott has a margin account with a balance of $50,000. The initial margin deposit is 50 percent, and RC Industries is currently selling at $50 per share.
-Refer to Exhibit 4.2.How many shares of RC can Heidi buy?
A) 2,500
B) 2,000
C) 1,000
D) 500
E) None of the above

Question

Quizplus · Accepted Answer

Letting P = price and Q = quantity of shares,
Heidi's share of the investment will = 50% of PQ.
Thus 0.50PQ = $50,000 and PQ = $50,000/0.50 = $100,000
$ \therefore $ At $50 per share,she can purchase ($100,000 ¸ $50)= 2000 shares.

Exhibit 4.2 Use the Information Below for the Following Problem(S)