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Bajan Works has a margin account and deposits $30,000. Assume the prevailing margin requirement is 80 percent, commissions are ignored, and the Regional Wine
Bajan Works has a margin account and deposits $30,000. Assume the prevailing margin requirement is 80 percent, commissions are ignored, and the Regional Wine Corporation is selling at $20 per share. b. C. How many shares can Bajan Works purchase using the maximum allowable margin? (3 marks) What is Bajan Works' profit (loss) if the price of Regional's stock rises to $30? (3 marks) KDC Corp is trading at $45/share. If you believe the stock is overvalued. d. Why type of trade could be implemented to benefit from a decline in the stock and why? (3 marks) e. After, implementing the above strategy, what would be the profit or loss if KDC fell as expected and you purchased to cover at $30/share? (2 marks)
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