Question

Carson Corporation stock sells for $32 per share, and you’ve decided to purchase as many shares as you possibly can. You have $56,000 available to invest. What is the maximum number of shares you can buy if the initial margin is 60 percent?

Answer 1

Answer:

2,917 shares

Explanation:

The maximum number of shares that can be bought from Carson Corporation will be computed as follows:

Maximum investment = (Funds available to invest / initial margin)

Maximum investment = $56,000/ 0.6 = $93,333

Number of shares       = Maximum Investment/ price per share

Number of shares       = $93,333/ $32

                                     = 2,917 shares