Question
I've tried solving this several ways and even ask two tutors elsewhere, but we can't seem to match up the answers to this. Thank you.
I've tried solving this several ways and even ask two tutors elsewhere, but we can't seem to match up the answers to this. Thank you. Please help asap.
I.Problems - Show all Work
1.You purchase 600 shares of Jenkins Corporation at $30 per share using an initial margin of 70%.The stock is now selling for $41 per share and you want to use the excess equity in your account to pyramid.You want to purchase 400 shares of Watson Corporation at $122 per share.If the minimum initial margin is 60%, what is the minimum amount of equity that you will have to put up in this transaction?
Correct Answer = $24,840
2.You purchase 500 shares of Richards Incorporated at $50 per share using an initial margin of 60%.Your maintenance margin is 25% and the minimum initial margin is 50%.
A. How low can the stock price fall before you receive a margin call?
Correct Answer = $26.67 per share
B. If the stock price falls to $21 a share, how much additional equity must you add to your account?
Correct Answer = $9,500
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