Question: D e Trader opens a brokerage account and purchases 3 0 0 shares of Internet Dreams at $ 4 0 per share. She borrows $

De Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $40 per share.
She borrows $4,000 from her broker to help pay for the purchase. The inferest rate on the loan is 8%,
a. What is the margin in De's account when she first purchases the stock?
b. If the share price falls to $30 per share by the end of the year, what is the remaining margin
in her account?
c. If the maintenance margin requirement is 30%, will she receive a margin call?
d. What is the rate of return on her investment?
Old Economy Traders opened an account to short-sell 1,000 shares of Internet Dreams from the
 De Trader opens a brokerage account and purchases 300 shares of

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!