Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

D e Trader opens a brokerage account and purchases 1 0 0 shares of Internet Dreams at $ 6 0 per share. She borrows $

De Trader opens a brokerage account and purchases 100 shares of Internet Dreams at $60 per share. She borrows $2,000 from her
broker to help pay for the purchase. The interest rate on the loan is 10%.
Required:
a. What is the margin in De's account when she first purchases the stock?
b. If the share price falls to $50 per share by the end of the year, what is the remaining margin in her account?
Remaining margin
c. If the maintenance margin requirement is 30%, will she receive a margin call?
Yes
No
d. What is the rate of return on her investment? (Negative value should be indicated by a minus sign. Round your answer to 2
decimal places.)
Rate of return
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

The Handbook Of Alternative Assets

Authors: Peter Temple

1st Edition

161477076X, 978-1906659219

More Books

Students also viewed these Finance questions

Question

Discuss the key people management challenges that Dorian faced.

Answered: 1 week ago

Question

How fast should bidder managers move into the target?

Answered: 1 week ago