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Pol Tondt opens a brokerage account and purchases 100 shares of Disney at $50 per share. He borrows $3,000 from his broker to help pay
Pol Tondt opens a brokerage account and purchases 100 shares of Disney at $50 per share. He borrows $3,000 from his broker to help pay for the purchase. The annual interest rate on the loan is 10%. a) What is the initial percentage margin in Pol's account? b) If the share price falls to $40 per share at the end of the year, what is the remaining margin in his account? c) If the maintenance margin requirement is 30%, will Pol receive a margin call (at the end of the year)? d) Find out the share price that would generate a margin call on Pol Tondt's account. e) If the share price increases to $60 per share at the end of the year, what is the rate of return of Pol Tondt's investment
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