Chapter $12$ Assignment

$2.$ Stock transactions: Margin trading

Suppose Sharon wants to purchase $300$ shares of Desertfly stock at $$50$ per share through Georgia Brokerage. The value of the shares is

If Sharon does not have enough funding to purchase the shares herself, and Georgia Brokerage requires an initial margin of at least $60$ percent, Sharon's initial equity investment would need to be at least in order for Georgia Brokerage to lend her the funds. If Sharon invests this amount, then Georgia Brokerage would cover the remaining

If the price of Desertfly's decreases to $$40$ per share, then the total value of Sharon's shares is now $.$ As a result, Sharon still owes the brokerage firm and as a result, her equity position is now $,$ which represents of the market value of the stock.

If Georgia Brokerage requires a maintenance margin of $35$ percent, then Sharon receive a margin call from Georgia Brokerage.

If Georgia Brokerage requires a $10$ percent annual interest payment on the loaned funds, the shares paid out an annual divided of $$5$ per share, and Sharon sold the shares at the end of the year when the price dropped to $$40$ per share, then what would her return on stocks purchased on margin be$?$

$-26\mathrm{.}83$ percent

$-25\mathrm{.}20$ percent

$-23\mathrm{.}33$ percent

$-21\mathrm{.}00$ percent

If Sharon was able to fund the entirety of the stock purchase herself and sold the shares at the end of the year when the price dropped to $$40$ per share, then what would her return on stocks purchased be$?$

$-12\mathrm{.}20$ percent

$-11\mathrm{.}00$ percent

$-10\mathrm{.}00$ percent

$-9\mathrm{.}50$ percent