Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You can leave this tab open while you answer the question. Question 33 (5 points) On September 19. you instruct your broker to buy as

image text in transcribed

You can leave this tab open while you answer the question. Question 33 (5 points) On September 19. you instruct your broker to buy as many FTS shares as possible utilizing the full margin. She informs you that your margin requirement is 80%. FTS is trading at $100/share and you have $4,000 available to invest. Assume interest of 5.5% is charged on any margin used. a. How many FTS shares will you purchase? b. How much, if anything will you borrow from the broker? c. If you sell your FTS shares on December 19t at a stock price of $120/share, what will be the amount of your capital gain? d. What will be your yield on this investment? e. On November 1st two months after purchasing the stock you receive a margin call. Explain why this has happened and what you must do to correct the situation (no calculations required - explain qualitatively)

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_2

Step: 3

blur-text-image_3

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

Dividend Policy On Share Price Volatility In Indian Stock Market

Authors: Vijay Deswal

1st Edition

3841859623, 978-3841859624

More Books

Students also viewed these Finance questions

Question

How do linear and nonlinear presentations differ? [LO-1]

Answered: 1 week ago