Question
Suppose you want to buy 400 shares of Starbucks (SBUX) at $75 per share. Initial margin requirement is 65%. Call money rate plus the spread
Suppose you want to buy 400 shares of Starbucks (SBUX) at $75 per share. Initial margin requirement is 65%. Call money rate plus the spread is 7%. You supplied cash just to meet the initial margin requirement and invested the rest on margin.
1.) What is your HPR and EAR, respectively if the price is $60 6 months later?
2.) What would the HPR and EAR have been if you had not invested on margin, but instead used a cash account?
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The Engineers Cost Handbook Tools For Managing Project Costs
Authors: Richard E. Westney
1st Edition
0824797965, 978-0824797966
