Question
1.Daniel borrowed $18,000 on margin to buy shares in TARRY, which is now selling at $34 per share. Daniels account starts at the initial margin
1.Daniel borrowed $18,000 on margin to buy shares in TARRY, which is now selling at $34 per share. Daniels account starts at the initial margin requirement of 40%. The maintenance margin is 30%. Two days later, the stock price falls to $32 per share.
a.Will Daniel receive a margin call?
b.How low can the price of TARRY shares fall before Daniel receive a margin call?
2.Sandy purchased 2,000 shares of the Ixnay at a price of $35 per share at the beginning of the year. Sandy paid a front-end load of 4%. The securities in which the fund invests increase in value by 10% during the year. The fund's expense ratio is 1.2%. What is Sandys rate of return on the fund if Sandy sells his shares at the end of the year?
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