Question
Holly buys 500 shares of Untimely, Inc. at $46 on a 60% initial margin requirement. Maintenance margin is 35% and interest rates on margin loans
Holly buys 500 shares of Untimely, Inc. at $46 on a 60% initial margin requirement. Maintenance margin is 35% and interest rates on margin loans are 11%. In 9 months, the stock is at $58.
A. What is Holly's margin at 58?
B. What is the excess and buying power at 58?
C. When will she get a margin call?
D. If she sells at 58, what is her HPR?
E. If she had done the same trade on a cash basis, would would her HPR be?
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Solution 1 Borrowed amount Shares purchased Share price 1 initial margin Borrowed amount 500 46 040 ...
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Concepts In Federal Taxation
Authors: Kevin E. Murphy, Mark Higgins, Tonya K. Flesher
19th Edition
978-0324379556, 324379552, 978-1111579876
