Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 2 a. Briefly explain the why limit buy and sell order are better than market order to preserve stock market liquidity? b. An investor

image text in transcribed

Question 2 a. Briefly explain the why limit buy and sell order are better than market order to preserve stock market liquidity? b. An investor is bullish on ACMELAB stock. The current market price is Tk. 108.40 per share, and investor has Tk. 61320 of own to invest. Investor can borrow an additional amount of Tk. 47080 from broker at an interest rate of 12.50% per year. A total of 1000 shares can be invested in this process. i. What will be investor rate of return if the price of ACMELAB stock goes up by 18.5% during the next year? Assume the stock currently pays no dividend. ii. If maintenance margin is 45.5%, how far does the price of ACMELAB stock have to fall to get a margin call? iii. If current market price plunge by 32% is there any margin call will be warranted

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

The Theory And Practice Of Investment Management

Authors: Frank J Fabozzi, Harry M Markowitz

2nd Edition

0470929901, 9780470929902

More Books

Students also viewed these Finance questions