Question

6) Marlene purchased 100 shares of Textcom stock at $89 per share using the prevailing minimum initial margin requirement of 75%. She held the stock for exactly 4 months and sold it without brokerage costs at the end of that period. The minimum maintenance margin was 55%. If the stock price subsequently falls to $60, calculate the actual margin percentage, and indicate whether Marlene's margin account would have excess equity, would be restricted, or would be subject to a margin call.

Answer 1

No. of stocks	100
Price/share	89
Total	8900
Initial margin	75%
Equity	6675
Debt	2225
Minimum maintenance margin	55%
Maintenance margin (minimum equity)	4895
New price of share	60
Value	6000
Less: debt	2225
Equity (Margin)	3775
Margin %	62.92%
Since margin is still above 55%, so there won't be any margin call.
It would be in a state of restricted equity since no additional stock could be bought without contributing equity