Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 177.78

-2.2%

Jan 9 9:30 AM EST

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To: YlangYlangBreeze who wrote (55455)	12/21/1999 1:32:00 PM
From: R. Ramesh	Read Replies (1) of 152472

I assume that you want to calculate the equity present as the value of Q changes. Here is my attempt. Let us say you have x dollars invested with current equity e. Current account value = xe Current loan = x (1-e) Let Q change from current price by a factor of y (for eg. a 10% gain will make y 1.1 and a 10% decline will make it 0.9) New account value = (x * y) - x * (1 - e) New account equity = ((xy) - x (1 - e))/(x*y) cancelling x from both numerator and denominator we get, new equity = (y - ( 1 - e ))/y Hope this helps. BTW, suppose you are interested in finding out when margin call kicks in etc. Here is a formula Decline to margin call = (e - m)/(1-m) where m is equity percent when margin call is issued by your broker and e is current equity. For example assuming e = 50% and m = 30% we get (at full margin) decline ratio = 0.2/0.7 = 0.285 That is at 28.5% decline in Q's price from current level will trigger margin call with above e and m values. Disclaimer: Always consult your broker regarding margin calls before taking your investment decisions. Not responsible for mistakes in calculations. Ramesh

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