Barbara buys 100 shares of DEM at $35 a share and 200 shares of GOP at $40


Barbara buys 100 shares of DEM at $35 a share and 200 shares of GOP at $40 a share. She buys on margin and the broker charges interest of 10 percent on the loan.
a. If the margin requirement is 55 percent, what is the maximum amount she can borrow?
b. If she buys the stocks using the borrowed money and holds the securities for a year, how much interest must she pay?
c. If after a year she sells DEM for $29 a share and GOP for $32 a share, how much did she lose on her investment?
d. What is the percentage loss on the funds she invested if the interest payment is included in the calculation?
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...
A broker is someone or something that acts as an intermediary third party, managing transactions between two other entities. A broker is a person or company authorized to buy and sell stocks or other investments. They are the ones responsible for...
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