CYPRUS INTERNATIONAL UNIVERSITY

ACCOUNTING AND FINANCE DEPARTMENT

INVESTMENTS ACFN514

ASSGNMENT 1 CHAPTER 2

Name & Surname: -......................................Student No.:-.............................

Group No:........................

Please answer all questions and show your work. Clearly, state your answer to each problem. Answers without explanation will not be given credit.

1.Suppose you want to buy 20,000 shares of Intel Corporation at a price of 15 per share. You put up 180,000 and borrow the rest. What does your account balance sheet look like? What is your margin.

2.Staci just used $6,000 of cash plus a $3,000 margin loan to purchase $9,000 worth of stock. This is the only transaction in her brokerage account. According to her account balance sheet, she now has account equity of:

3.You purchased 650 shares of stock at a price of 57 per share on 50 percent margin. If the maintenance margin is 30 percent, what is the critical stock price?