Question
Attach the answers in word format for the following questions and show all your works. #1. Suppose that Googles share is currently selling at $20
Attach the answers in word format for the following questions and show all your works.
#1. Suppose that Googles share is currently selling at $20 per share. You buy 1000 shares using $10,000 of your own money, borrowing the remainder of the purchase price from your broker.
What is the increase in the net worth of your brokerage account if the price of Google immediately changes to (i) 24, or (ii) 16?
If the maintenance margin is 25%, how low can Googles price fall before you get a margin call?
#2. You are bearish on Yahoo stock and decided to sell short 200 shares at the current market price of $50 per share. How much in cash or securities must you put into your brokerage account if the brokers initial margin requirement is 45% of the value of the short position?
How high can the price of the stock go before you get a margin call if the maintenance margin is 25% of the value of the short position?
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