Question
John James has $500,000 of Apple stock in his brokerage account. His account has no debt. Apple stock is currently selling at $1,000 per share.
John James has $500,000 of Apple stock in his brokerage account. His account has no debt. Apple stock is currently selling at $1,000 per share. The following information applies: IMR = 50% MMR = 30% (house requirement) He has decided to take out a margin loan using Apple Stock as collateral. What is the most he can borrow from his margin account? Show the balance sheet of the account after the transaction.
Suppose the falls to $800 per share. What is his Percentage Margin?
By what percentage would the price have to fall for John to be subject to a margin call?
Step by Step Solution
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Step: 1
To calculate the amount John can borrow using his Apple stock as collateral we use the Initial Margi...
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
