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| g) How much can be withdrawn in cash?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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