Question: c and d 9. (2 pts) Assume an initial margin requirement of 50% and a maintenance margin requirement of 30%. An investor buys 100 shares

c and d

9. (2 pts) Assume an initial margin requirement of 50% and a maintenance margin requirement of 30%. An investor buys 100 shares of a $70 stock on margin. The price of the stock subsequently drops to $60. a. What is the actual margin at $60? b. If the price declines to $55 is there a margin call? c. Assume the price drops to $52. What is the amount of the margin call? d. Assume the price drops to $49. What is the amount of the margin call

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Suppose that a firm has borrowed $510,000 in the current year at 7.5% interest rate, with a commitment to repay the loan (principal and interest) in equal annual instalments over the following 7...

(2) Assume an initial margin requirement of 50% and a maintenance margin of 30%. An investor buys 100 shares of stock on margin at $60 per share. The price of the stock subsequently drops to $50....

3. Suppose Y Corp stock is trading at $100 per share. You think the stock price will fall in the future thus interested in shorting it. The initial margin requirement is 50% and maintenance margin...

please answer the question in the pdf.its about investment MGMT 141 Homework 1 October 1, 2013 Chong Huang 1. Suppose there are only two stocks in the market: Stock ABC and Stock EFG. Please predict...

1) A stock is trading at a current price of $100. An investor decides to short 1,000 shares of the stock. The initial margin requirement is 50% and the maintenance margin is 30%. A. the investor...

4. Assume you consider Apple's stock overvalued and Google's stock undervalued. So, you decide to buy Google stock on margin and at the same time sell short Apple's stocks. Assume the initial margin...

Margin Trading: Assume that you can buy U . S . Coal stock for $ 2 0 per share, either by paying cash or buying on margin. You would like to purchase 1 0 0 total shares of the stock. The initial...

If the initial margin requirement is 50%, and the maintenance margin is 30%, an investor purchasing 200 shares of stock selling $100 must put up what amount to buy the stock. Select one: O a. $8,000...

Question 11 Top Broker plc opens a brokerage account and short-sells 1,000 shares of XYZ stock at 20 per share. The initial margin requirement is 50% and the maintenance margin is 30%. The price of...

So, Lets assume Joe Campbell had $33051.58 of cash in his account. He then sold 8400 shares of KBIO at $2. After the market close, the stock surged to $18.5. Assume the initial margin requirement is...

Which characteristic describes the default gateway of a host computer? O a. The logical address of the router interface on the same network as the host computer O b. The logical address of the router...

Canadian restaurant industry is going to be the focus for the Strategy project for this course. Your group must develop a comprehensive and integrated Marketing plan focused on finding new...

Which of the following is / are true about a bond rated BB + ? I. It will have a lower yield than a bond rated BBB - , all else what II . It is an investment grace bond III. It Carrie s makes risk...

Select all the statements that are TRUE. Answer, Generative AI corrects for bias presented in its training data, limiting the potential for discrimination. Selected Answer, Generative AI like ChatGPT...