Rock PLC purchased 400 shares of Magnet PLC at $50 per share through a brokerage account....
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Rock PLC purchased 400 shares of Magnet PLC at $50 per share through a brokerage account. Rock PLC borrows $4500 from the broker to get support the purchase at an interest of 9% (loan interest rate). 1. Calculate the margin in Rock PLC's account when they first purchase the shares from Magnet PLC. 2. If the share prices fall to $40 at the year end, calculate the remaining margin in Rock PLC's account. Will Rock PLC receive a margin call if the margin maintenance requirement is 30%. Rock PLC purchased 400 shares of Magnet PLC at $50 per share through a brokerage account. Rock PLC borrows $4500 from the broker to get support the purchase at an interest of 9% (loan interest rate). 1. Calculate the margin in Rock PLC's account when they first purchase the shares from Magnet PLC. 2. If the share prices fall to $40 at the year end, calculate the remaining margin in Rock PLC's account. Will Rock PLC receive a margin call if the margin maintenance requirement is 30%.
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1 To calculate the margin when Rock PLC first purchases the shares from Magnet PLC we need to dete... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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