Question
6. The stock of PQR Industries is trading at $26.24. You feel the stock price will decline, so you short 277 shares at an initial
6. The stock of PQR Industries is trading at $26.24. You feel the stock price will decline, so you short 277 shares at an initial margin of 65 percent. If the maintenance margin is 37 percent, at what share price (in $) will you receive a margin call?
7. Suppose you purchase 434 shares of stock at $34.1 per share with an initial cash investment of $8,538. If your broker requires a 33 percent maintenance margin, at what share price (in $)will you be subject to a margin call?
8. Suppose you purchase 720 shares of stock at $30.54 per share with an initial cash investment of $11,250. Suppose the call money rate is 4.02 percent and you are charged a 1.5 percent premium over this rate. Calculate your return on investment (in percent) if the share price one year later is $2.50 below the price when you bought the stock. Ignore dividends. Answer to two decimals.
9. You just sold short 601 shares of XYZ, Inc., a fledgling software firm, at $94.39 per share. You cover your short one year later when the share price is $4.50 below the price at which you shorted the shares. If the company paid $1.11 per share in dividends over this period, what is your rate of return (in percent) on the investment? Assume an initial margin of 57 percent. Answer to two decimals.
10. Suppose you take out a margin loan for $31,061. You pay a 6.34 percent effective rate. If you repay the loan in 10 months, how much interest (in dollars) will you pay? Answer to two decimals.
Please answer all 5 questions pls.
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