Answered step by step
Verified Expert Solution
Question
1 Approved Answer
8. (20%) An investor of $10,000 to invest Twitter Inc. currently traded at $100 with 50% initial margin. Suppose Twitter does not pay dividend. Maintenance
8. (20%) An investor of $10,000 to invest Twitter Inc. currently traded at $100 with 50% initial margin. Suppose Twitter does not pay dividend. Maintenance margin percentage required by the broker is 35%. Ignore the interest on the margin. a) What is the total market value of Twitter stock the investor purchased? b) At what price of Twitter stock will the investor receive a margin call from the broker? c) What is the margin percentage if the Twitter stock drops by 30%? d) What is the rate of return on the investor's investment if the Twitter stock drops by 30%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started