CFA Practice Question
Julie Baskoff has purchased 100 shares of Watercraft Industries at 95 on margin. The initial margin was 60% and her broker requires a 35% maintenance margin. At what price would Julie get a margin call?
A. 87.69
B. 33.25
C. 58.46
Explanation: Price when margin call received = Loan per share / (1 - MM) = (0.40 x 95) / 0.65 = 58.46
User Contributed Comments 6
| User | Comment |
|---|---|
| Flyredsnow | memorize the function well! |
| Shelton | mg=(cv-l)/cv |
| teddajr | Price for MC=Loan per share/(1-MM) |
| serboc | (1-initial/1- maintenance) X price |
| endurance | Quite the same, but intuively very easy to remember: (Price - own equity share)/(1 - maintenance) --> (95 - 57)/(1-0,35) = 58,46 your own equity part of the price is 95 x 0,6 = 57 |
| bidisha | This is going to be on exam. Memorize formula. |