Question
Suppose Yvette wants to purchase 800 shares of Desertfly stock at $60 per share through Nevada Brokerage. The value of the shares is $_________. If
Suppose Yvette wants to purchase 800 shares of Desertfly stock at $60 per share through Nevada Brokerage. The value of the shares is $_________.
If Yvette does not have enough funding to purchase the shares herself, and Nevada Brokerage requires an initial margin of at least 60 percent, Yvette's initial equity investment would need to be at least $_________in order for Nevada Brokerage to lend her the funds. If Yvette invests this amount, then Nevada Brokerage would cover the remaining$_______.
If the price of Desertfly's decreases to $50 per share, then the total value of Yvette's shares is now $________. As a result, Yvette still owes the brokerage firm $_______, and as a result, her equity position is now $_______, which represents%____of the market value of the stock.
If Nevada Brokerage requires a maintenance margin of 40 percent, then Yvette________ (will/will not)receive a margin call from Nevada Brokerage.
If Nevada Brokerage requires a 10 percent annual interest payment on the loaned funds, the shares paid out an annual divided of $1 per share, and Yvette sold the shares at the end of the year when the price dropped to $50 per share, then what would her return on stocks purchased on margin be?
-36.42 percent
-31.67 percent
-28.50 percent
-25.34 percent
If Yvette was able to fund the entirety of the stock purchase herself and sold the shares at the end of the year when the price dropped to $50 per share, then what would her return on stocks purchased be?
-18.30 percent
-15.00 percent
-14.25 percent
-13.05 percent
True or False: Based on your calculations, it can be concluded that purchasing stock on margin results in fewer losses if the stock price decreases.
True
False
Please help me fill in the blanks and show calculations as well!
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