Equity Margin Call

CFA Level I Equities
#1

An investor uses ¥90,000 equity to purchase 100 shares of a stock at a leverage ratio of 2.5. If the maintenance margin is 25%, then the trigger price for a margin call (in ¥) is closest to:

a. 800
b. 1688
c.1800

The answer to this question is 1800. I was under the impression that the formula is Price(1-initial margin)/ (1- maintenance margin) . I am getting an ans near to 800

#2

¥1,800 makes no sense; the trigger price has to be less than the initial price.

#3

Thought so . Must be an error with the solution . Thanks !

#4

My pleasure.