You purchased 100 shares of KLM at 40 dollars a share by depositing the minimum amount of margin.

Question

If the initial margin requirement was 50 percent and the maintenance margin requirement is 30 percent, you will get a margin call if KLM's price falls to, 12, 20, 29, or 32 dollars?

Answer 1

Studying for the 7?

Answer 2

12

Here's how I reasoned thru this.

If the price in the initial purchase were 100, then 30 percent of 100 is 30.

But the price isn't hundred. So I took %40 of 100 to get 40, which is your orig price. Then I took 40% of 30 to get 12.