You wish to contribute a $24,000 deposit towards a margin loan from the Notional Investment Bank Ltd.
Fantastic news! We've Found the answer you've been seeking!
Question:
A) What is the maximum amount you could borrow using this margin loan?
B) Estimate the portfolio value assuming you borrow the maximum amount allowed under this margin loan?
C) There is a 10% buffer associated with this margin loan. Assuming you have borrowed the maximum allowed amount, what is the buffer amount, assuming no change in the underlying portfolio value?
D) Assuming a decline in the value of your portfolio by 12%, what is the dollar value of your portfolio?
E) Would this 12% decline in your portfolio value trigger a margin call?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: