Markets: A Rigorous Course

M14 · Problem 23 ★★ Check

An MTF margin call

You buy ₹8 lakh of an F&O Group I stock under MTF, paying 50% and funding the rest at 14% a year (simple interest). The applicable margin is m=27.5%m = 27.5\%. (a) What fall triggers a margin call if interest is ignored? (b) What fall triggers it after 90 days, including interest? (c) At day 90 the stock is 35% below your purchase price. Compute the cash shortfall and the value of stock you must sell to cure the call by selling.

Answers

Commas, ₹, % and 1e-3 notation are accepted.

Working

Keep your working next to each problem, in markdown with maths: create a free account or sign in.

Solution

Try the problem first. Write down where you got stuck before opening it.

Create a free account

Reading is open to everyone. An account keeps your progress, answers, notes and code drafts, and gives you the study plan, the journals and the simulator. Running code needs an account approved for it.