Question
Assume that you would like to buy 100 shares of a stock that is currently priced at $ 70. The initial margin is 75% and
Assume that you would like to buy 100 shares of a stock that is currently priced at $ 70. The initial margin is 75% and maintenance margin is 35%.
If the stock pays $ 2 per share in annual dividend; the cost of borrowing is 3% per year; transaction costs are $ 80 calculate total dollar return and return on investment. Show your results step by step. Assume that you had bought the stock at $70 per share and it is now at $ 80 and you own 100 shares. Show your results below and in step by step.
Capital gain =
Dividend =
Interest cost=
Total dollar return =
Total % return on investment =
You sell short 100 shares of stock at a price of $100 per share with an initial margin of 65 percent and maintenance margin of 25 percent. Show this in a T balance sheet format, and calculate your margin.
Price = 100 | |
Credit for short sale
Cash Deposit = | Liability: Market Value of short sale
Equity =
|
Total Assets = | Liabilities + Equity=
|
Margin =
If the price falls to $90 per share, show this in a T balance sheet format, and calculate your margin.
Price = 90 | |
Credit for short sale =
Cash Deposit =
| Liability:
Equity = |
Total Assets | Liabilities + Equity =
|
Margin =
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