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Please show steps Adidas Inc. stock sells for $25 per share. Allen and Janelle each has $5,000 to invest in Adidas's stock. Allen has decided
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Adidas Inc. stock sells for $25 per share. Allen and Janelle each has $5,000 to invest in Adidas's stock. Allen has decided to purchase as many shares as he can on margin with 60% initial margin requirement while Janelle wants to buy the shares on cash account. Ignore transaction cost. a. What are the maximum numbers of shares Allen and Janelle can buy? 2. b. If two days later, Adidas Inc. stock price drops to $10, what is the gainloss for Allen and Janelle? c. If two days later, Adidas Inc. stock price increases to $35, what is the gain/loss for Allen and d. What is the lowest possible price before Allen's account is subject to margin call? Assume Hint: Create balance sheets at $25 and $10 share price Janelle? Hint: Create balance sheets at $35 share price maintenance margin is 30%Step by Step Solution
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