00:01
Hello students, we are given a question here and investor buys $8 ,000 worth of a stock priced at $40 per share using 50 % initial margin.
00:13
The broker charges 6 % on the margin loan and requires a 30 % maintenance margin.
00:23
Students, here further we are given that in one year the investor has interest payable and gets a margin.
00:30
At the time of the margin call, the stock's price must have been.
00:36
So since we are supposed to know that a margin call will occur if a margin call will occur, okay, students, if the equity divided by equity divided by market value, okay students, equity divided by market value is equal.
01:02
To 30 percentage it means obviously 0 .3 or less so we can directly say that 0 .3 now equity can be written as here how we will write it 200 times p okay students 200 times p minus p is the price stock's price okay minus the 50 percentage as we are given the initial margins of 50 percentage of 8000 which is 4 ,000 so we can write here 4 ,000 minus here we are given that the and broker charges 6 % on the margin loan.
01:37
So it should be like 6 % of 50 % of 8 ,000.
01:43
So 50 % of 8 ,000 is 4 ,000 and the 6 % of 4 ,000 comes out as equals to 240.
01:50
So we can write 240 and then divided by market value, which is, which can be written as, again, 200p is equal to 0 .3.
02:02
Okay, students.
02:03
Now here we are supposed to know that it should be 200p minus 400, sorry 4 ,000, 240 is equal to...