Sara Sanders purchased

30

shares of Apple stock at

$189.83

per share using the prevailing minimum initial margin requirement of

51%.

She held the stock for exactly

4

months and sold it without any brokerage costs at the end of that period. During the

4-month

holding period, the stock paid

$1.51

per share in cash dividends. Sara was charged

5.4%

annual interest on the margin loan. The minimum maintenance margin was

25%.

a. Calculate the initial value of the transaction, the debit

balance,

and the equity position on Sara's transaction.

b. For each of the following share prices, calculate the actual margin percentage, and indicate whether Sara's margin account would have excess equity, would be restricted, or would be subject to a margin call:

(1)

$175.99,

(2)

$207.69,

and (3)

$122.31.

c. Calculate the dollar amount of (1) dividends received and (2) interest paid on the margin loan during the

4-month

holding period.d. Use each of the following sale prices at the end of the

4-month

holding period to calculate Sara's annualized rate of return on the Apple stock transaction:(1)

$185.96,

(2)

$195.92,

and (3)

$205.61.

a. The initial value of the transaction is

(Round to the nearest cent.)

The debit balance is

(Round to the nearest cent.)

The equity position is

(Round to the nearest cent.)

b. (1) If the share price falls to

$175.99,

the actual margin percentage will be

(Round to two decimal places.)

The account in this case

has excess equity

is restricted

is below minimum maintenance margin

. (Select from the drop-down menu.)

(2) If the share price rises to

$207.69,

the actual margin percentage will be

(Round to two decimal places.)

The account in this case

has excess equity

is restricted

is below minimum maintenance margin

. (Select from the drop-down menu.)

(3) If the share price falls to

$122.31,

the actual margin percentage will be

(Round to two decimal places.)

The account in this case

is below minimum maintenance margin

has excess equity

is restricted

. (Select from the drop-down menu.)

c. (1) During the

4-month

holding period, the dividends received are

(Round to the nearest cent.)

(2) During the

4-month

holding period, the interest paid is

(Round to the nearest cent.)

d. (1) If the sale price at the end of the

4-month

holding period is

$185.96,

then Sara's annualized rate of return is

(Round to two decimal places. Enter a negative return as a negative number.)

(2) If the sale price at the end of the

4-month

holding period is

$195.92,

then Sara's annualized rate of return is

(Round to two decimal places. Enter a negative return as a negative number.)

(3) If the sale price at the end of the

4-month

holding period is

$205.61,

then Sara's annualized rate of return is

(Round to two decimal places. Enter a negative return as a negative number.)