Answered step by step
Verified Expert Solution
Link Copied!

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

image text in transcribed

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

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

Banking And Finance

Authors: Brian Duignan

1st Edition

1615308946, 978-1615308941

More Books

Students also viewed these Finance questions

Question

Describe the terms "Historiography and Modernism".

Answered: 1 week ago