Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

De Trader opens a brokerage account and purchases 400 shares of Internet Dreams at $20 per share. She borrows $2,500 from her broker to help

De Trader opens a brokerage account and purchases 400 shares of Internet Dreams at $20 per share. She borrows $2,500 from her broker to help pay for the purchase. The interest rate on the loan is 7%. Required: a. What is the margin in De's account when she first purchases the stock? Margin b. If the share price falls to $10 per share by the end of the year, what is the remaining margin in her account? $ 8,175 Remaining margin $ OO c. If the maintenance margin requirement is 30%, will she receive a margin call? Yes O No 22 11
image text in transcribed
image text in transcribed
De Trader opens a brokerage account and purchases 400 shares of Internet Dreams at $20 per share. She borrows $2,500 from her broker to help pay for the purchase. The interest rate on the loan is 77%. Required: o. What is the margin in Dee's account when she first purchases the stock? b. If the share price falls to $10 per share by the end of the year, what is the remaining margin in her account? c. If the maintenance margin requirement is 30%, will she recelve a margin call? Yes No b. If the share price falls to $10 per share by the end of the year, what is the remaining margin in her account? c. If the maintenance margin requirement is 30%, will she recelve a margin call? Yes No d. What is the rate of return on her investment? (Negotive value should be indicated by a minus sign. Round your answer to 2 decimal places.)

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 Financial Modeling

Authors: Jack Avon

1st Edition

1430262052, 978-1430262053

More Books

Students also viewed these Finance questions