Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

b ) Suppose you sell the stock at a price of $ 6 2 . What is your return? What would your return have been

b)Suppose you sell the stock at a price of $62. What is your return? What would your return have been had you purchased the stock without margin? What if the stock price is $46 when you sell the stock? return = selling stock value - purchase stock value / deposit amount...
($62275)-$53275$8000
=$2,475$8,000=0.309375=30.9375%
c) assuming the initial margin requirement is 70 percent. Does this suggest a relationship between the initial margin and returns?
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Institutions Management

Authors: Anthony Saunders

1st Edition

0256110565, 9780256110562

More Books

Students also viewed these Finance questions