Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

De Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $40 per share. She borrows $4,000 from her broker to help

De Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $40 per share. She borrows $4,000 from her broker to help pay for the purchase. The interest rate on the loan is 8%. a. What is the margin in Des account when she first purchases the stock? (Omit the "$" sign in your response.) Margin $ b-1. If the share price falls to $30 per share by the end of the year, what is the remaining margin in her account? (Omit the "$" sign in your response.) Remaining margin $ b-2. If the maintenance margin requirement is 30%, will she receive a margin call? Yes No c. What is the rate of return on her investment? (Negative value should be indicated by a minus sign. Round your answer to 1 decimal place. Omit the "%" sign in your response.) Rate of return %

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 Commercial Aircraft Finance Handbook

Authors: Ronald Scheinberg

1st Edition

1781372608, 978-1781372609

More Books

Students also viewed these Finance questions

Question

What is the best conclusion for Xbar Chart? UCL A X B C B A LCL

Answered: 1 week ago