@convexity
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Up4
No that’s may not be necessarily true @convexity. Margin call occurs when the price dips below Po * [ ( 1-IM ) / ( 1- MM) ], assuming a long position.
where Po is the initial purchase price, at which the transaction is initiated, IM = initial margin, MM= maintenance margin
I think that saying there is a margin call when price falls bellow Po * [ ( 1-IM ) / ( 1- MM) ] is exactly equivalent to saying there is a margin call if your margin level falls bellow the maintenance margin.
I did some algebra and I think I can prove this (uploaded here http://www.mediafire.com/download/tn18t91sn52f1jp/Proof.pdf)
Up4I passed. Over 70% for all except Economics which is ironic since I was an econ major in college.
Thanks to the users and operators of this site/forum/ for helping me prepare; it made a noticeable difference. Congrats to everyone else who passed.
Up3But doesn’t a margin call occur only if your account margin drops bellow the maintenance level? So wouldn’t that mean you always need to fill it back up to initial margin when there’s a margin call?
Up3Thanks, good luck everybody
Up2Luckily the problem appears to have solved itself. The problem in that thread isn’t exactly what I had but thanks for the help anyways.
For anyone else who might run into this, I think the problem may be the result of dying batteries (as discussed here http://www.wallstreetoasis.com/forum/s/hp-12c-reliability-pr-error)
Up2That makes sense, and thanks!
Up1Now I get confused ^^
Say Po is 100, IM is 50%, MM is 25%
As I understand it, a Margin call occurs, when the price dips 66,7. Than my maintenance margin is 16,7 (66,7 * 0,25) and the funds in my account are also 16,7 (50 – 33,3).
In case I only have to provide MM if the price dips (but not goes beyond MM), I don’t need to provide any additional funds. Where is my mistake?
I think the condition must be a non-strict inequality
P < Po * [ ( 1-IM ) / ( 1- MM) ]
so if your account balance is equal to 16.67 then you have to add funds
