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Your broker requires an initial margin of 40% and a maintenance margin of 20%, both for short sales and for margin borrowing. Your initial capital
- Your broker requires an initial margin of 40% and a maintenance margin of 20%, both for short sales and for margin borrowing. Your initial capital in your brokerage account is CAD 500,000 and the interest rate for margin loans is 6%. The price of a share of RBC is CAD 50.00.
- How many shares of RBC could you maximally buy?
- Suppose you buy 2000 shares of RBC at the current price, at what future price would you start receiving a margin call?
- Suppose you buy 2000 shares of RBC at the current price and, after a year, the price has fallen to CAD 48.00. What is your annual return?
- How many shares of RBC could you maximally short?
- If you short 1000 shares of RBC at the current price, at what future price would you receive a margin call?
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The School Fundraising Handbook
Authors: Lindsey Marsh
1st Edition
1785834266, 978-1785834264
