Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. An investor buys 500 shares of Unilever at $78 per share on margin. The initial margin requirement is 70%, and the maintenance margin is

1. An investor buys 500 shares of Unilever at $78 per share on margin. The initial margin requirement is 70%, and the maintenance margin is 25%. (a) What is the actual margin if the price drops to $59? (b) Calculate the margin call price. (c) What is the actual margin if the price drops to $27? (d) If the investor had to recover from margin call how many shares he or she needs to sell. (e) If the investor had to recover from margin call how much cash he or she needs to add. (f) If the investor had to recover from margin call how much loan amount he or she needs to recover.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Family Inc Using Business Principles To Maximize Your Familys Wealth

Authors: Douglas P. McCormick

1st Edition

1119577411, 978-1119577416

More Books

Students also viewed these Finance questions