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Problem 3-02

Lauren has a margin account and deposits $50,000. Assume the prevailing margin requirement is 40 percent, commissions are ignored, and the Gentry Wine Corporation is selling at $40 per share.

How many shares can Lauren purchase using the maximum allowable margin? Round your answer down to the nearest whole share, if necessary.

shares-----

What is Laurens profit (loss) if the price of Gentrys stockrises to $45? Use a minus sign to enter loss, if any. Round your answer to the nearest dollar. Use the rounded value of the number of shares from part a.

$

falls to $35? Use a minus sign to enter loss, if any. Round your answer to the nearest dollar. Use the rounded value of the number of shares from part a.

$

If the maintenance margin is 30 percent, to what price can Gentry Wine fall before Lauren will receive a margin call? Round your answer to the nearest cent. Use the rounded value of the number of shares from part a.

$