Suppose that you borrow 6000 to establish your margin account and buy 200 share of Ecola company
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Question:
Suppose that you borrow 6000 to establish your margin account and buy 200 share of E−cola company at the price 60 per share.
(1) If you earn no interest on the funds in your margin account, what will be your rate of return after 1 year if E-cola company is selling at 40, 60 or $80? Assume that E-cola company pays no dividends. (6 scores)
(2) If the maintenance margin is 25%, how low can E-cola company’s price drop before you get a margin call?
Related Book For
College Algebra Graphs and Models
ISBN: 978-0321845405
5th edition
Authors: Marvin L. Bittinger, Judith A. Beecher, David J. Ellenbogen, Judith A. Penna
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