Question
De Trader opens a brokerage account and purchases 100 shares of Internet Dreams at $56 per share. She borrows $3,500 from her broker to help
De Trader opens a brokerage account and purchases 100 shares of Internet Dreams at $56 per share. She borrows $3,500 from her broker to help pay for the purchase. The interest rate on the loan is 9%.
a. What is the margin in Des account when she first purchases the stock? Margin __$ .
If the share price falls to $46 per share by the end of the year, what is the remaining margin in her account? (Round your answer to 2 decimal places.) Remaining margin __ %.
If the maintenance margin requirement is 30%, will she receive a margin call? No Yes
c. 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 __ %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started