Initial margin req. 0.50 Maintenance margin req. 0.30 Call rate 0.025
1. You buy 1,000 shares of Facebook on February 1, 2016 at $115 a share. What is the dollar amount of your initial margin?
2. You sell the FB shares on February 1, 2017 at $133 a share. What is your return?
3. Suppose you don’t sell. How low can FB’s price go before you receive a margin call?
4. Suppose FB drops to $80 a share. What is your actual margin?
5. What is the dollar amount of your margin call?
6. If you can’t meet the margin call, what is the maximum market value you can have given that your equity is fixed?
7. How many shares will your broker sell if you can’t meet the margin call?
8. What is the market value of your stock after the broker sells the shares?
9. What is your loan amount after the broker sells the shares?