You purchase 300 shares of stock on margin at a price of $42 per share plus $150 in brokerage commissions at a time when the margin requirement is 50%
How much additional cash would you need to deposit with your broker if the price of the stock dropped to $37 per share?
A) $825
B) $1,500
C) $1,650
D) $5,550
Answer: A
Explanation: A)
(300 shares × $42) + $150 = $12,750 × 0.5 = $6,375
300 shares × $37 = $11,150 × 0.5 = $5,550
Additional cash needed $825
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