Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Customer X opened a margin account at a local brokerage firm. Xs initial investment was to purchase 200 shares of MGROS on margin at 40

Customer X opened a margin account at a local brokerage firm. Xs initial investment was to purchase 200 shares of MGROS on margin at 40 TL per share. X borrowed 4,000TL from broker to complete the purchase.

A) At the time of the purchase, what was the actual margin in Xs account?

B) If MGROS Stock subsequently rises in price to 60TL per share, what is the actual margin in Xs account?

C) If MGROS Stock subsequently falls in price to 30TL per share, what is the actual margin in Xs account?

D) If X was to short sells 500 shares of MGROS at 40TL per share. The initial margin and maintenance margin requirement is 40%. To what price can the stock rise before X receives a margin call?

I would be glad if you explain it step by step in your own words in detail. especially with how the transactions are and the calculations of the transactions, thank you in advance.

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 Markets And Institutions

Authors: Jeff Madura

9th Edition

1439038848, 978-1439038840

More Books

Students also viewed these Finance questions

Question

11. What to look for in their frst home.

Answered: 1 week ago

Question

An acquisition attempt can be fought by a ( n ) :

Answered: 1 week ago