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Margin purchase

Use the information below for the following 3 problems. Thanks for your help!
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1. Jackie has a margin account with a balance of $45,000. If initial margin requirements are 50 percent and Turtle Industries is currently selling at $50 per share: How many shares of Turtle can Jackie purchase?
a. 1,800
b. 100
c. 900
d. 10,000
e. None of the above

2. Use the same data: What is Jackie's profit if Turtle's price rises to $60?
a. $12,000
b. $18,000
c. $22,000
d. $25,750
e. $28,570

3. Use the same data as the previous questions. If the maintenance margin is 30 percent, to what price can Turtle Industries fall before Jackie receives a margin call?
a. $21.75
b. $23.17
c. $32.42
d. $35.71
e. None of the above
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Please show calculations. Thanks

Solution Preview

1. The margin requirement is 50%. This implies that with $45,000, Jackie can purchase 45,000/.5 = $90,000 worth of shares.
The selling price is ...

Solution Summary

The solution explains some questions relating to purchasing stock on margin

$2.19