Question: You purchased 100 shares of Apple common stock on margin at $100 per share. Assume the initial margin is 60% and the maintenance margin is

You purchased 100 shares of Apple common stock on margin at $100 per share. Assume the initial margin is 60% and the maintenance margin is 40%. (Assume the stock pays no dividends, and ignore interest on the margin loan.) (a) At what price will you get a margin call?

(b) What is your return when you get a margin call?

Step by Step Solution

★★★★★

3.42 Rating (146 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Answer To determine the price at which you will receive a margin call we need to calculate the equity percentage in your margin account The equity percentage is the ratio of your equity the value of y... View full answer

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!

Leapfrog Lawn Service provides general lawn maintenance to customers. The company's fiscal year-end is December 31. Information necessary to prepare the year-end adjusting entries appears below. 1....

Bunga Raya Kuning Berhad is a Malaysian-based MNC that obtains 12 percent of its supplies from the U.K. manufacturers. Sixty-five percent of its revenues are from due to exports to U.K. where its...

Topple Co has the following figures expected for its first year of operations: 1. Sales $3,400,000 2. Purchase expense $3,200,000 3. Average accounts receivable $308,000 4. Average inventory $485,000...

1. A bond investor is considering two 10 year maturity bonds both rated AAA: the municipal bond is yielding 1.15% and the corporate bond is yielding 2.10%. At what marginal tax rate would the bond...

1A. You purchased 100 shares of IBM common stock on margin at $70 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin...

You purchased 100 shares of IBM common stock on margin at $20 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin call?...

You purchased 100 shares of ABC common stock on margin at $40 per share. Assume the initial margin is 60% and the maintenance margin is 30%. You will get a margin call if the stock drops below...

please help. due now You purchased 100 shares of IBM common stock on margin at $130 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would...

You purchased 100 shares of ABC common stock on margin at $50 per share. Assume the initial margin is 50% and the maintenance margin is 30%. Below the stock price of __________ you would get a margin...

4. You purchased 100 shares of IBM common stock on margin at $120 per share. Assume the initial margin is 40%, and the maintenance margin is 30%. Below what stock price level would you get a margin...

Prepare the following statements for the financial year ended 31 December, 2020: a) Statement of Financial Position

Elizabeth, 86, owns herhome, valued at $640,000. She has $60,000in a bank account and receives a full pension. Elizabeth also has a small $15,000 total portfolio of shares in two blue-chip companies....

*11 Master Karr is a supplier of industrial parts. All orders are received at a call center. The call center has 15 phone lines, so that a maximum of 15 callers may be in the system at a time. Calls...

2.5 In an Ethemet network, which of the following is true: a. Ethemet switches (a.k.a bridges) lean addresses by looking at the destination address of packets as they pass by. b. Ethemet hubs and...

If tan 0 > 0 and cos 0

Given G(x, y) = y* sin(2x) + x2(y10-cos(y?))". Find Gyyyxxxy- a. - 192 sin(2x) Ob. -192 cos(2x) OC-192y sin(2x) O d. - 96y cos (2x) Clear my choice

Find the values of the six trigonometric functions of 0 if the terminal side of an angle 0 in standard position contains the point (7, -1).

If sin 30 + sin 60 + sin 90 + ... + sin 510 + sin 540, evaluate its sum.

This week's data set has over 2 million records. Think about the highest-ranking person you work for, be it a manager, president, colonel, dean, or spouse (include their title). What would you give...

Haleys Graphic Designs Inc. is considering two mutually exclusive projects. Both projects require an initial investment of $10,000 and are typical average-risk projects for the firm. Project A has an...

Two textile companies, McDaniel-Edwards Manufacturing and Jordan-Hocking Mills, began operations with identical balance sheets. A year later both required additional manufacturing capacity at a cost...

Audrey is considering an investment in Morgan Communications, whose stock currently sells for $60. A put option on Morgans stock, with an exercise price of $55, has a market value of $3.06....

22. Cite an example in which reorganization of the brain is helpful and one in which it is harmful.

21. Is denervation supersensitivity a change in axons or dendritic receptors?

9. Most people can use varying amounts of three colors to match any other color that they see. Who would be an exception to this rule, and how many colors would they need?