Marge wants to buy ABC stock on margin. She has $20,000 to invest, ABC stock sells for

Fantastic news! We've Found the answer you've been seeking!

Question:

Marge wants to buy ABC stock on margin. She has $20,000 to invest, ABC stock sells for $100 per share, the initial margin requirement is 50%, and the maintenance margin is 30%. Marge borrows as much as possible to buy stock.

a. If the stock price decreased to $80, what is the holding period return?

b. Calculate the percentage margin in (a)

c. What is the highest price that would trigger a margin call?

Related Book For answer-question

Principles of Finance

ISBN: 978-1285429649

6th edition

Authors: Scott Besley, Eugene F. Brigham

See More Books

Posted Date: Jul 20, 2023 08:05 AM

See More Questions

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
What has motivated you most since accepting your Omega Nu Lambda nomination to grow in your career development? Give an example
Determining the present value of a lump-sum future cash receipt Marsha Bittner expects to receive a $600,000 cash benefit when she retires five years from today. Ms. Bittners employer has offered an...
Imagine that youre the F&B director for a hotel group with four properties in the New York area. The owner has asked you for data about food quality at each location. You collected the guest feedback...
True or False: If $E R R>M A R R$, then $I R R>E R R>M A R R$.
Vincent Yarwood practices medicine under the business title Vincent Yarwood, M.D. During July, the medical practice completed the following transactions: Jul. 1 Yarwood contributed $68,000 cash to...
The Relational Model and Logical Design (a) In the context of the relational data model, describe the following terms: (i) relation (ii) primary key (iii) foreign key (iv) null ...
Salma wanted to sell her house and advertised it in the local newspaper on Monday for 400,000. Eshan saw the advertisement and rang Salma to make an appointment to see the house. During the He liked...
Two shunt generator operating in parallel has an output current of 500 A Generator G1, armature resistance Ra1 is 0.02 ohm and generated voltage E1 = 445v Generator G2, armature resistance Ra2 is...
Write a cpp program to print a string in reverse form if the character in vowels letters print the letter after tow indexes?
In the automotive labor market in Detroit Metropolitan, the elasticity of demand has been estimated to be -0.40 while the elasticity of supply is estimated at 0.15. Suppose Michigan government is...
Intercultural Communication: Google's Dilemma in China b) why should Organizations use multiple ethical standards situated in the diverse legal, cultural, and social contexts of various countries?
Suppose that (i) Good x is an inferior good and income falls and simultaneously (ii) cost of production of good x rises. Explain what happens to the equilibrium price and quantity as the above...
Briefly explain how total revenue (TR) will be affected in each of the following cases (use the TR formula): (a) Demand is elastic and price increases by 1% (b) The price elasticity of demand (Ed)=...
Pistol Inc. has acquired all the voting shares of Saber Inc. and has gathered the following data to prepare consolidated financial statements. Pistol paid $1,200,000 for its investment. Details of...
Explain briefly what is meant by electronic data interchange (EDI). How does EDI affect a companys audit trail?
Your firm, Agrico Products, is considering the purchase of a tractor that has a net cost of $72,000, will increase pretax operating cash flows before taking account of depreciation effects by $24,000...
Find the interest rates, or rates of return, on each of the following: a. You borrow $700 and promise to pay back $749 at the end of one year. b. You lend $700 and receive a promise to be paid $749...
Do you think it is possible to construct a portfolio of stocks that has an expected return that equals the risk-free rate of return?
Let $\left\{X_{n}ight\}_{n=1}^{\infty}$ be a sequence of random variables such that \[\lim _{n ightarrow \infty} E\left(\left|X_{n}-cight|ight)=0\] for some $c \in \mathbb{R}$. Prove that \(X_{n}...
Let $U$ be a UNIFORm $[0,1]$ random variable and let $\left\{X_{n}ight\}_{n=1}^{\infty}$ be a sequence of random variables such that \[X_{n}=\delta\left\{U ;\left(0,...
Let $X_{1}, \ldots, X_{n}$ be a set of independent and identically distributed random variables following the distribution $F$. Prove that for a fixed value of $t \in \mathbb{R}$, the empirical...

Marge wants to buy ABC stock on margin. She has $20,000 to invest, ABC stock sells for

Question:

Expert Answer:

To calculate the holding period return and the percentage margin we first need to determine the initial investment the final investment value and the ... View the full answer

Principles of Finance

Students also viewed these accounting questions