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The stock of Flop Industries is trading at $50. You feel the stock price will decline,...

The stock of Flop Industries is trading at $50. You feel the stock price will decline, so you short 350 shares at an initial margin of 75 percent. If the maintenance margin is 40 percent, at what share price will you receive a margin call? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

MArgind Call Price:

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Answer #1

Marginal Call Price = Share Price * (1 - Initial Margin) / (1 - Maintenance Margin)

Marginal Call Price = $50 * (1 - 0.75) / (1 - 0.40)

Marginal Call Price = $12.50 / 0.60

Marginal Call Price = $20.83

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