Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ameera is bullish on New York stock exchange since the Dow Jones Index (DJIA) shows the increasing of 20% for few months ago. She has

image text in transcribed

Ameera is bullish on New York stock exchange since the Dow Jones Index (DJIA) shows the increasing of 20% for few months ago. She has US$50,000 and invest in Stock Bxbird.at market price of US$150/share for 200 shares and the remaining invest in Stock Aprae that are selling at US$100/share. Currently stock Bxbird and Appua paid dividend of US$3/share and US$4/share. Ameera has provide 60% of her margin for Bxbird and US$11,000 for Appe. A year later Bxbird price increase by 30% and the divided has increased by US$0.50/share. While Appoe price falls by 15% and the dividend has declined to US$2/share. Ameera being charged 7% of interest rate for Babird and 9% interest for Apre. Ameera has invested RM20,000 in Global Equity Funds This fund has RM500 million of assets and RM70 million of liabilities and its shares outstanding is 200 million. Its management fee is RM10 million. It was selling at 15% discount. After a year the assets has increased by 20% and the liabilities and the management fees are increased by 5% and the number of shares outstanding are remain It's priced at a premium of 6%. She has received a dividend of RM1.20 share and a capital gains distributions of RM0.50/share. Required: a) How much is the initial margin provided for Bxbird and the initial margin percentage for Apnoe? (4 marks) b) What is the remaining margin a year later for both stocks? (7 marks) What is the rate of return for a year later for both stocks? (4 marks) d) Is Ameera receive a margin call for each of stock if a maintenance margin for both stocks are 30% and 40%? Justify. (6 marks) e) How high that both of stock prices can go before Ameera receives a margin call? (4 marks) f) How much is Ameera holding period retum after one year bought the Global Equity Fund? (5 marks) How much is Ameera market-based holding period return after one year bought the Global Equity Fund? (5 marks) h) Evaluate all of these three of her investment and should she remain in all these three investments? Justify

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance Fundamentals

Authors: K. Moeti

3rd Edition

148512946X, 9781485129462

More Books