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Question5 a. Mr. Wadud Sheikh bought 1150 lots of UNILEVERCL shares on margin at tk. 195.27 per believing it was underpriced. This transaction is done
Question5 a. Mr. Wadud Sheikh bought 1150 lots of UNILEVERCL shares on margin at tk. 195.27 per believing it was underpriced. This transaction is done on margin, which has annual interest cost 11.50% per annum. 175 days later UNILEVERCL price has declined to tk. 166.90 per share and he sold out all the shares. And over the stock holding period he received 225% cash and 5% stock dividend. Brokerage cost of tk. 127.25 per lot on cach transaction and 10 shares make one lot. Note: (FV =Tk. 10, CMP=157.31 tk.) i. Margin requirement is 55 percent. Calculate Mr. Wadud Sheikh gain or loss on this position, considering margin interest and the transaction costs, and dividend. Show ROI of the investment. ii. Maintenance margin is 48 percent, is there any margin call at selling price and justified his decision already taken. iii. What is the actual margin at Tk. U17 per share is the account restricted? How much amount investor needs to deposit bring back the account in operation. iv. b. Demonstrate steps that are involved in Assets backed Securities (ABS) creation process with major advantages
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