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Suppose you purchase 950 shares of stock at $63 per share with an initial cash investment of $31,225. If your broker requires a maintenance margin of 30 percent, at what share price will you be subject to a margin call? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Margin call price

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Answer #1

Total purchase = 950 shares × $63 = $59,850

Margin loan = $59,850 - $31,225 = $28,625

Margin call price = $28,625 / [950 – (0.30 × 950)] = $43.05

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