Question

Assume you have a margin account with a 50% initial margin. You purchase 100 shares of stock at $80 per share. The price increases to $100 per share. What is the net value of your investment (margin) now

Answer 1

Net value of the investment (margin) is $6,000

Step-by-step explanation:

The initial margin = (100 shares * $80) * 50%

The initial margin = $4,000

Increase in the Margin value = 100 shares* ($100-$80)

Increase in the Margin value = 100 shares * $20

Increase in the Margin value =$2,000

Net value of the investment (margin) = $4,000 + $2,000

Net value of the investment (margin) = $6,000