CFA Practice Question

There are 275 practice questions for this study session.

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.
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