What's wrong with this margin calculation?
As the referenced document says, there are 3 formulas, and you need to use the formula which results the greatest margin requirement. In your case, you need to use the 10% formula:
How would you calculate separate margins in the following example: You have a fairly volatile component that is basically a commodity that you have sold as a standalone product for years. You then begin offering a value-add service of programming these components so users can buy the basic component or a ready to go preprogrammed version. Sales can also offer sales deals at their discretion. I just want to spitball some ideas. The point of that question is to test if the user can connect shares and stock price.  However, that being said yeah, you're right. Probably gives off the impression that it's a bit elementary. I'll look into changing it asap. "When margin is calculated as the equity percentage of an account, the point at which a broker will forcibly liquidate is typically called ""maintenance margin"". In the US, this is 25% for equities. To calculate the price at which this will occur, the initial and maintenance margin must be known.  The formula for a long with margin is: and for a short where P_m is the maintenance margin price, P_i is the initial margin price, m_i is the initial margin rate, and m_m is the maintenance margin rate.  At an initial margin of 50% and a maintenance margin of 25%, a long equity may fall by 1/3 before forced liquidation, a short one may rise by 50%. This calculation can become very complex with different asset classes with differing maintenance margins because the margin debt is applied to all securities collectively." Your headline is still inaccurate.  Two serious errors:  1.) 2647, which is a difference of 32% 2.) They are CEOs of Large corporations, not 2647 random CEOs.    Maybe this nitpicking will help you understand why your idea of perfect headline accuracy is misguided. The most important part is that it's mostly true.  It's much better than [this situation.](http://www.reddit.com/r/Seattle/comments/ncd12/as_a_result_of_mondays_protests_at_the_port_of/c37zdcy) Wow I honestly hope this is your first ever finance class. Anyway this isn't even finance, the only thing here finance related are the terms. It's really an algebra problem. Which is 1,312,500/x = 2 soooo find X.  X = 656250  so 131,250 in notes payable. If you don't know what to do know to find the quick ratio, then change majors "Don't worry about it.  The State doesn't care about rounding error.  All you need to do is say ""We charge our prices with tax included"" - you know, like carnivals and movie theaters.   Then follow the procedures your state specifies for computing reportable tax.  Quite likely it wants your pre-tax sales total for the reporting period. To get that, total up your gross sales that you collected, and divide by (1 + tax rate).  Just like DJClayworth says, except do it on total sales instead of per-item.  If you need to do the split per-transaction for Quickbooks or something, that's annoying.  What Quickbooks says will be pennies off the method I describe above.  The state don't care as long as it's just pennies, or in their favor." This is a really easy problem. If you're genuinely having trouble, maybe don't be a finance major? All you need to do is know the formulas for the ratios and plug in the variables. Simple and clean.  However, if you're lazy and trying to get free answers off of reddit, then you could have saved the time you took to post this question and actually do the problem. You probably would have gotten the answer all by yourself without much help. The MWRR that you showed in your post is calculated incorrectly. The formula that you use... ($15,750 - $15,000 - $4,000) / ($15,000 + 0.5 x $4,000) Translates into a form of the DIETZ formula of (EMV-BMV-C)/(BMV + .5 x C) The BMV is the STARTING balance. And as a matter of fact, the starting balance was NOT 15,000. It was IN FACT 11,000. See, the starting value for a month MUST BE the ending value of the prior month. So the BMV of 11,000 would give you the correct answer. Because if you added 4,000 at the start of the month (on day 1), it would have to have been ADDED to the 11,000 of the PRIOR month's ENDING value. Make sense? That would also mean that the addition of 4000 to the 11000 would imply that you started day 1 with 11,000. Make sense? Summary: When doing the calculations, you may use the ending value on the last day of the month to get your EMV. BUT YOU MAY NOT take the ending value on day 1 to get the BMV. That simply can not make sense since you already added a bunch of money during the day. Think about it. Davie Right, that's my understanding of the problem too. I tried some of the indices last night (not necessarily the ones you are suggesting), but when pulling them into COMP it only provided the price return, not the total return including coupons. This latter part is still the challenge. You've flipped the numerator and denominator around, and need to multiply by 100 to get percentage rather than 10: I like to use a simple example to assess reasonableness of an approach, if you had invested $100 and after 1 year had $150, your approach would yield: But since $50 is half of $100, we know the rate of return should be 50%, so we know that approach is off. But, flipping the numerator and denominator and multiplying by 100 gets us the 50% we expected: Edit: Good catch by @DJohnM you've called it 9 years, but it's actually 11, so you'd want to adjust accordingly. Thank you very much for this thoughtful response.  In my opinion the judges care more about the why behind your valuation rather than a how.  Anyone can use a formula, but it takes so much more to understand why to use the formula.    Personally, the 'why' is going to be the toughest part for me understand and wrap my head around.  Once again thank you for the advice and the tip. My interpretation of that sentence is that you can't do the buying/selling of shares outright (sans margin) because of the massive quantity of shares he's talking about.  So you have to use margin to buy the stocks. However, because in order to make significant money with this sort of strategy you probably need to be working dozens of stocks at the same time, you need to be familiar with portfolio margin.  Since your broker does not calculate margin calls based on individual stocks, but rather on the value of your whole portfolio, you should have experience handling margin not just on individual stock movements but also on overall portfolio movements. For example, if 10% (by value) of the stocks you're targeting tend to have a correlation of -0.8 with the price of oil you should probably target another 10% (by value) in stocks that tend to have a correlation of +0.8 with the price of oil.  And so on and so forth.  That way your portfolio can weather big (or even small) changes in market conditions that would cause a margin call on a novice investor's portfolio. "The sentence is mathematically wrong and verbally unclear. Mathematically, you calculate the downwards percentage by So, it should be Verbally, the reporter should have written ""The stock is down by 25%"", not ""down by -25%""." You should use the Gordon Growth model, but you are using the wrong rate.  required return = rf + market premium x Beta  rm = 0,12, premium = 0,08 --&gt; rf = 0,04 thus rr = 0.04 + 0.08 * 1.5 = 0.16  then you get $15/(0.16-0.05) = $136,36 According to my calculations, you always lose money on group B.  x = average monthly balance  Income for a year = 0.015 * (12 * x) = 0.18 * x  Cost of funds for one month = 0.04 * x  Cost of funds for one year = 12 * (0.04 * x) = 0.48 * x  Profit? at end of year   = income_for_year - cost_of_funds_for_one_year  = (0.18 * x) - (0.48 * x)  = forever loss