Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Lauren has a margin account and deposits $50,000. Assume the prevailing margin requirement is 50 percent, commissions are ignored, and the Gentry Wine Corporation is
Lauren has a margin account and deposits $50,000. Assume the prevailing margin requirement is 50 percent, commissions are ignored, and the Gentry Wine Corporation is selling at $30 per share. a. How many shares can Lauren purchase using the maximum allowable margin? Round your answer down to the nearest whole number. shares b. What is Lauren's profit (loss) if the price of Gentry's stock i. rises to $35? Use a minus sign to enter loss, if any. Round your answer to the nearest dollar. Use the rounded value of the number of shares from part a. ii. falls to $25? Use a minus sign to enter loss, if any. Round your answer to the nearest dollar. Use the rounded value of the number of shares from part a. c. If the maintenance margin is 40 percent, to what price can Gentry Wine fall before Lauren will receive a margin call? Round your answer to the nearest cent. Use the rounded value of the number of shares from part a
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started