Problem 2-7 Margin Calls (LO3, CFA5) You decide to buy 1700 shares of stock at a...

Question

Question

Answer 1

Answer #1

ANSWER =

Stock Price Decline

33.33%

Explanation :

Amount borrowed = (1,700 * $94)* (1 – .50) = $79,900

Margin call price = ($79,900 / 1,700) / (1 – .25) = $62.67

Stock price decline = ($62.67 – 94) / $94 = -33.33%

Answer 2

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