Question
Answer questions13 - 18 using the following information SHOW YOUR CALCULATIONS/WORK!! You have purchased 200 shares of NVIDIA Corp. (NVDA) at $450 per share. You
Answer questions13 - 18 using the following information SHOW YOUR CALCULATIONS/WORK!!
You have purchased 200 shares of NVIDIA Corp. (NVDA) at $450 per share. You will borrow the maximum amount permissible based on the Feds Regulation T. Assume that the Maintenance Margin level for your NVDA position is 40%. Your brokers call rate (the cost of borrowing funds) is 10% per annum.
12. How much equity or initial margin will you commit to this NVDA position (in $s) if you borrow the maximum amount that complies with Regulation T?
13. At what price per share will you experience a margin call based on the 30% Maintenance Margin Requirement (MMR)?
14. How much interest will be due on your broker loan after the passage of one year?
15. After the passage of one year, NVDA has rallied to $525 per share. During the year NVDA has paid $0.25 per share in dividends. What is the rate of return on your equity?
16. After the passage of one year, NVDA has declined to $390 per share. During the year NVDA has paid $0.25 per share in dividends. What is the rate of return on your equity?
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