Toby Jensen originally purchased 400 shares of CSC stock on margin at a price of $60 per share. The initial margin requirement is 50% and the maintenance margin is 25%. CSC stock price has fallen dramatically in recent months and it closed today with a sharp decline bringing the closing price to $40 per share. Will Jensen receive a margin call?
Yes, he does not meet the minimum maintenance margin requirement.
No, he meets the minimum maintenance margin requirement.
No, he meets the minimum initial margin requirement.
I know the margin call formula = P0 * (1-Initial/1-Maintenance)
Solving this I get = $60*(1-..5/1-.25) = $40.
The correct answer was C. I guessed A, was I wrong because he was not below the maintenance margin? Instead exactly equal? Just want to be sure I didn’t miss anything.
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