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Dee Trader opens a brokerage account, and purchase 300 shares of Internet Dreams at $40 per share. She borrowed $4,000 from her broker to help
Dee Trader opens a brokerage account, and purchase 300 shares of Internet Dreams at $40 per share. She borrowed $4,000 from her broker to help pay for the purchase. The interest rate on the loan is 8%. The mainterancemargin requirement is 30%. (18pts) 1. a. What is the margin in Dee's account when she first purchased the stock? (3pts) b. If the share price rises to $43, what is the margin in Dee's account? Show Dee's balance sheet.(5pts) c. If Dee sells the shares at $43, what is the rate of return will she obtain? (3pts) d. If the share price falls to $30, what is the remaining margin in her account? will she receive a margin call? (4pts) e. How far can the stock price fall before a margin call? (3pts)
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