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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.
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