Assume that you want to purchase 4 round lot shares of GP. The current share price of GP is $56. Your initial margin is 65%. Maintenance margin is 27%. GP pays half yearly dividend of $1 per share. For the borrowed amount you have to pay interest of 7% per annum. After 3 month you want to sell the shares for $62.

Question.

1. Find out transaction cost, equity and borrowed amount.

2. After 3 days of purchase if the share price increases by 5% what is the actual margin (approximate) and comment?

3. After 5 days of purchase if the share price decreases by $30 what is the actual margin (approximate) and comment?

4. Calculate margin call price (approximate).

5. How many shares you need to sell (approximate) to recover margin call?

6. Calculate total dividend amount for a quarter.

7. Calculate interest amount (approximate) for a quarter.

8. Calculate the return on investment amount (approximate) for a quarter.

9. Calculate the return on investment amount (approximate) for a nine months.