Question
Investment Analysis and Fundamentals 1) Mr. George who bought today 500 shares of Toys R shares paying $ 100 per share decides to buy more
Investment Analysis and Fundamentals
1) Mr. George who bought today 500 shares of Toys R shares paying $ 100 per share decides to buy more shares of Toys R by borrowing money from the brokerage house
A) How many additional shares Mr. George may buy?
B) Suppose that Toys R is up to $ 140 after 6 months. What will be the net profit of Mr. George in case of not borrowing and in case of borrowing?
Note: The annual interest rate is 10%
2) Mrs. Esra recently bought 100 shares of Garanti by her own money and additional 100 shares of Garanti by borrowing a loan from the brokerage house. She paid 9 TL per share. Unfortunately today the Garanti trades at 5TL per share. Her brokerage house imposes a 0.35 maintenance margin. Do Mrs. Aye receive a margin call today if Garanti trades at 5 TL per share? If so; how much additional money she must deposit in cash today to retain her position?
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