Shares of RossCorp stock are selling for $45 per share. Brokerage commissions are 2% for purchases and 2% for sales. The interest rate on margin debt is 6.25% per year. The maintenance margin is 30

The price at which a margin call would be received is $28.929.

Explanation:

The stated question does not contain complete information. The remaining information is as follows.

Assume that you purchase 150 shares of RossCorp stock at $45 each by making a margin deposit of 55 percent. At what price would you receive a margin call?

The price is calculated using the formula for maintenance margin as follows.

Maintenance margin = Equity in account / Value of stock

Equity in account = (Shares purchased x Call price) - (Shares purchased x Remaining ratio x Sale price)

Equity in account = (150 x P) - (150 x 0.45 x 45)

                             = 150P - 3037.5

Value of stock = Shares purchased x Call price

                        = 150P

Inserting these values into the formula for maintenance margin:

0.3 = (150P - 3037.5) / 150P

45P = 150P - 3037.5

105P = 3037.5

P = 28.929

Hence, the price at which a margin call would be received is $28.929.

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