Question
Holly bought 100 shares of Ultra Ltd. at $60 each using her margin account on 10 January 2022. The broker requires an initial margin of
Holly bought 100 shares of Ultra Ltd. at $60 each using her margin account on 10 January 2022. The broker requires an initial margin of 50%, a maintenance margin of 30%, and charges 8% interest p.a. a) If on 11 January 2022 the share price dropped to $55, what was the actual margin on Holly's account? b) If Holly sold the shares on 11 January 2022, what would have been her percentage return? Ignore all costs. c) Now assume Holly bought the shares with only her own money. Ignoring all costs, what would have been her percentage return if she sold the shares on 11 January 2022?
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