1. You just opened a margin account with a local brokerage firm. The initial margin is 60% and the
maintenance margin is 30%. You bought 500 shares of TRH at $50 per share on the margin.
a) What are the initial equity position and loan balance?
b) How far can the price go down before you receive a margin call?
c) If the price dropped suddenly to $20. How much cash should be added to the account to restore the margin?
d) If the price declined to $24, how many shares must be sold to restore the maintenance margin (ignore the contribution of part c)?