Problem: Lauren has a margin account and deposits of $50,000. Assuming the initial margin requirements is 40%, and The Gentry shoe corporation is selling at $25.00 per share:
Q1. How many shares can Lauren purchase using the maximum allowable Margin?
Q2. What are Lauren's profit (loss) and the return on investment if the price of Gentry's stock rises to $45 per share and at $20.00 per share?
Q3. If the maintenance margin is 30%, to what price can Gentry Shoe fall before Lauren will receive a margin call?