Question: Margin Requirement (mr) 50% Maintenance Margin (mm) 30% Shares Bought (sb) 1000 Price Per Share (pps) $40 IR/Year on Margin Account (ma) 4% a) How

Margin Requirement (mr) 50%
Maintenance Margin (mm) 30%
Shares Bought (sb) 1000
Price Per Share (pps) $40
IR/Year on Margin Account (ma) 4%
a) How much money must the investor deposit?
b) Assuming the investor deposits $30,000, how far could the stock price fall before the investor gets a margin call?
c) If the stock reaches $14.29 how much money must the investor deposit in order to avoid liquidations?
d) What would be the rate of return at $14.29
e) If it was a cash account, calculate investor's rate of return at $14.29
f) If the stock increased to $45, What is the buying power of the margin account?
g) How much can be withdrawn in cash?
h) If the stock is short sold and receives $40 per share and deposited $30,000 how far can the stock price rise before the investor receives a margin call?

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