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Stock transactions: Margin trading Suppose Beth wants to purchase 6 0 0 shares of Hummingcast stock at $ 6 0 per share through Kentucky Brokerage.
Stock transactions: Margin trading
Suppose Beth wants to purchase shares of Hummingcast stock at $ per share through Kentucky Brokerage. The value of the shares is
If Beth does not have enough funding to purchase the shares herself, and Kentucky Brokerage requires an initial margin of at least percent, Beth's initial equity investment would need top be at least in order for Kentucky Brokerage to lend her the funds. If Beth invests this amount, then Kentucky Brokerage would cover the remaining
If the price of Hummingcast's decreases to $ per share, then the totalvalue of Beth's shares is now As a result, Beth still owes the brokerage firm and as a result, her equity position is now which represents of the market value of the stock.
If Kentucky Brokerage requires a maintenance margin of percent, then Beth receive a miargin call from Kentucky Brokerage.
If Kentucky Brokerage requires a percent annual interest payment on the loaned funds, the shares paid out an annual divided of $ per share, and Beth sold the shares at the end of the year when the price dropped to $ per share, then what would her return on stocks purchased on margin be
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