An investor of $10,000 to invest Twitter Inc. currently traded at $100 with a 50% initial margin.

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An investor of $10,000 to invest Twitter Inc. currently traded at $100 with a 50% initial margin. Suppose Twitter does not pay a dividend. The maintenance margin percentage required by the broker is 35%. Ignore the interest on the margin.

a) What is the total market value of the Twitter stock the investor purchased?

b) At what price of the Twitter stock will the investor receive a margin call from the broker?

c) What is the margin percentage if the Twitter stock drops by 30%?

d) What is the rate of return on the investor's investment if the Twitter stock drops by 30%?

Related Book For answer-question

Investment

ISBN: 978-0073530703

9th edition

Authors: Zvi bodie, Alex kane, Alan j. marcus

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Posted Date: Feb 27, 2020 07:53 AM

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An investor of $10,000 to invest Twitter Inc. currently traded at $100 with a 50% initial margin.

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Investment

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