1. The price of Facebook stock is currently at $31.54 and you decide to buy 120 shares...
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1. The price of Facebook stock is currently at $31.54 and you decide to buy 120 shares on margin. You borrow $1,500 from your broker and finance the remainder of the purchase with your own cash. a. What is your initial percentage margin? b. If the price rises to $35, what is the net return? c. If the broker's maintenance margin is 40%, what is the minimum value that Facebook stock price can take before you are issued a margin call?
2. You buy 400 shares of stock at a price of $37.79. The initial margin requirement is 50% and the maintenance margin is 30%. a. How much do you borrow? b. At what price will you first receive a margin call?
Related Book For
Fundamentals of Investing
ISBN: 978-0133075359
12th edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
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