Assume you just purchased

250

shares of Home Depot at

$40.00

per share with a 50 percent margin requirement.

a. What would be the total cost of the purchase? How much would you borrow, and how much would you have to contribute in cash?

b. What would happen to your investment if the price of Home Depot stock rose to

$50.00

per share (ignoring any possible dividends)? What would be your profit if you sold?

c. What would happen to your investment if the price of Home Depot stock fell to

$30.00

per share (ignoring any possible dividends)? What would be your loss if you sold?

Question content area bottom

Part 1

a. Assume you just purchased

250

shares of Home Depot at

$40.00

with a 50 percent margin requirement, the total cost of the purchase is

$enter your response here.

(Round to the nearest cent.)

Part 2

The loan amount is

$enter your response here.

(Round to the nearest cent.)

Part 3

The amount of your contribution is

$enter your response here.

(Round to the nearest cent.)

Part 4

b. If the price of Home Depot stock rose to

$50.00

per share (ignoring any possible dividends), the total value of the investment would now be

$enter your response here.

(Round to the nearest cent.)

Part 5

The amount of the margin is now

$enter your response here.

(Round to the nearest cent.)

Part 6

The profit is

$enter your response here.

(Round to the nearest cent.)

Part 7

c. If the price of Home Depot stock fell to

$30.00

per share (ignoring any possible dividends), the total value of the investment would now be

$enter your response here.

(Round to the nearest cent.)

Part 8

The amount of the margin is now

$enter your response here.

(Round to the nearest cent.)

Part 9

The loss is

$enter your response here.

(Round to the nearest cent and enter as a negative number.)