Answer:
The price at which a margin call would be received is $28.929.
Explanation:
The stated question does not contain complete information. The remaining information is as follows.
Assume that you purchase 150 shares of RossCorp stock at $45 each by making a margin deposit of 55 percent. At what price would you receive a margin call?
The price is calculated using the formula for maintenance margin as follows.
Maintenance margin = Equity in account / Value of stock
Equity in account = (Shares purchased x Call price) - (Shares purchased x Remaining ratio x Sale price)
Equity in account = (150 x P) - (150 x 0.45 x 45)
= 150P - 3037.5
Value of stock = Shares purchased x Call price
= 150P
Inserting these values into the formula for maintenance margin:
0.3 = (150P - 3037.5) / 150P
45P = 150P - 3037.5
105P = 3037.5
P = 28.929
Hence, the price at which a margin call would be received is $28.929.
