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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Business

Roger Jordan

7 August, 05:04

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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Answers (1)

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Mason Padilla · Answer 1

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.