You purchased 100 shares of XON common stock on margin at $60 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin.
A) $42.86
B) $50.75
C) $49.67
D) $80.34

Question

Quizplus · Accepted Answer

100 shares × $60 × 0.5 = $6,000 × 0.5 = $3,000 (loan amount); 0.30 = (100P $3,000)/100P; 30 - P = 100P - $3,000; -70P = -$3,000; P = $42.86.

You Purchased 100 Shares of XON Common Stock on Margin