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10 November, 21:15

Taylor Industries stock is selling for $32 a share. You would like to purchase as many shares of this stock as you can. Your margin account currently has available cash of $6,200 and the initial margin requirement is 60 percent. What is the maximum number of shares you can buy

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  1. 10 November, 23:49
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    322 shares

    Explanation:

    When you buy on the margin, your broker will lend you money to purchase the stocks that you need.

    Since you have $6,200 on your margin account and your margin requirement is 60%, your maximum purchase = $6,200 / 60% = $10,333.33

    With $10,333.33 you can buy ⇒ $10,333.33 / $32 = 322.92 ≈ 322 shares

    We have to round down to the last full share.
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