Question
1.Recently, your roommate purchased 700 shares of TPHB at $12.45 on 50% margin.The stock had been holding its ground, but has cratered over the past
1.Recently, your roommate purchased 700 shares of TPHB at $12.45 on 50% margin.The stock had been holding its ground, but has cratered over the past few days, and closed today at $7.90.Your roommate received a margin call.
a.By what percentage has the stock price declined?
b.What is the value of the margin call?
c.How much equity would your roommate have in the trading account after making the margin call?
d.Suppose your roommate decides to sell instead of make the margin call.What is the return on his investment?
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Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
9th Edition
73530700, 978-0073530703
