You wish to contribute a $15,000 deposit towards a margin loan from the Notional Investment Bank Ltd. This margin loan has a Loan to Value (LVR) ratio of 70%.

What is the maximum amount you could borrow using this margin loan?

Answer 1

Choose...

$44,000

$15,000

Yes

$70,000

$50,000

$5,000

$30,800

$60,000

$65,000

$7,000

No

$30,000

$37,500

$35,000

Estimate the portfolio value assuming you borrow the maximum amount allowed under this margin loan?

Answer 2

Choose...

$44,000

$15,000

Yes

$70,000

$50,000

$5,000

$30,800

$60,000

$65,000

$7,000

No

$30,000

$37,500

$35,000

There is a 10% buffer associated with this margin loan. Assuming you have borrowed the maximum allowed amount, what is the buffer amount, assuming no change in the underlying portfolio value?

Answer 3

Choose...

$44,000

$15,000

Yes

$70,000

$50,000

$5,000

$30,800

$60,000

$65,000

$7,000

No

$30,000

$37,500

$35,000

Assuming a decline in the value of your portfolio by 12%, what is the dollar value of your portfolio?

Answer 4

Choose...

$44,000

$15,000

Yes

$70,000

$50,000

$5,000

$30,800

$60,000

$65,000

$7,000

No

$30,000

$37,500

$35,000

Would this 12% decline in your portfolio value trigger a margin call?

Answer 5

Choose...

$44,000

$15,000

Yes

$70,000

$50,000

$5,000

$30,800

$60,000

$65,000

$7,000

No

$30,000

$37,500

$35,000