In the EOCs of Market organization and structure, the 23 question, asks to compute the price at which the trader will receive a margin call.
The data is the following: stock price = 25, the initial margin = 50%, and the maintanence margin = 30%
I used this formula: Price at which I recieve the MC = P0*(1-initial margin) / (1-maintanence margin)
But it doesnt work out, and the book uses this equation:
Equity per share / Price per share: 12.5 + P -25 / P = 30%
The 2 formulas should get the same result but they do not do, does anyone know why?
Thanks in advance!