Question
1. Ruiwen decides to buy on margin 60 shares of JZV, which are selling for $29 per share. The initial margin requirement is 60%. If
1. Ruiwen decides to buy on margin 60 shares of JZV, which are selling for $29 per share. The initial margin requirement is 60%. If the maximum Loan to Value you are allowed is 75%, which price below is closest to the price at which Ruiwen receives a margin call? Ignore transaction costs and interest on the margin loan.
$37.12
$15.47
$19.01
$17.69
2. Wong decides to short sell 33 shares of WZY, which are selling for $18 per share. The initial margin requirement is 60% and the maintenance margin is 40%. If the stock price falls to $10.63 and Wong covers the short, which answer below is closest to Wongs holding period return? For simplicity, please ignore transaction costs.
76.39%
86.95%
40.94%
68.24%
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