Margin Accounting for Stocks: an Excel Classroom Exercise
17 Pages Posted: 20 Apr 2006
Date Written: March 6, 2007
This paper illustrates the mechanics of buying stock on margin with the ability to account for buying or selling more of the same stock as the price changes (assuming one uses the same broker). This latter component allows the student to see how the margin set for stock purchases at different prices interact. Further, it is very easy to demonstrate how margin calls become frequent when a stock price plummets. This compliments much of what is now being taught with trading simulation software and student managed funds.
Keywords: Margin, Student-managed Funds, Excel, Pedagogy
JEL Classification: G10
Suggested Citation: Suggested Citation