Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In 2018 you purchased 100 shares of Disney Co. on margin. The stock is currently trading at $80. Your initial margin requirement is 70 %

In 2018 you purchased 100 shares of Disney Co. on margin. The stock is currently trading at $80. Your initial margin requirement is 70 % with an interest rate on the margin loan of 8%. You do not earn interest on your funds in the margin account. You have a minimum maintenance requirement of 30%.

At what price will you get a margin call?

If Disney Co sold at $95 at the end of 2018, what is your rate of return?

What is your rate of return on Disney Co. if 100% of the investment were your funds?

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

Private Equity Mathematics

Authors: Oliver Gottschalg

1st Edition

1908783508, 9781908783509

More Books

Students also viewed these Finance questions

Question

Explain how perspective taking reduces prejudice toward outgroups.

Answered: 1 week ago