Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose the call money rate s 4, 5% and you pay s spread of 2.5% over that. You buy 800 shares of stock at $34

Suppose the call money rate s 4, 5% and you pay s spread of 2.5% over that. You buy 800 shares of stock at $34 per share. You put up $15,000.
If your broker requires a 30% maintenance margin. What price you will be subjected to margin call? One year later, the stock is selling for $48 per share, $34 and $29. Construct an equity balance sheet for each price and the change in margin account. Calculate your return on investment for each share price above.

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

Real Estate Finance

Authors: John P. Wiedemer

8th Edition

0324142900, 9780324142907

More Books

Students also viewed these Finance questions

Question

2. When is the job to be completed?

Answered: 1 week ago

Question

What are the steps involved in the HR planning process?

Answered: 1 week ago