Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your client purchased 50,000 shares of P&G on February 4, 2018 at $79.92 per share. She also purchased these shares on margin, borrowing 50% of

Your client purchased 50,000 shares of P&G on February 4, 2018 at $79.92 per share. She also purchased these shares on margin, borrowing 50% of the purchase price of these shares. The margin interest rate is 2% per year, and the maintenance margin is 35%. She planned to sell her position on February 4, 2019.

She would have been subject to a margin call for a price $___?___ or lower. Assume the annual margin interest rate would apply regardless of the actual borrowing period. Round your answer into two decimal places.

Assume she sells her entire position at $98.15 per share a year later. Her return on this position over the last year will be ___?___%. Round your answer for two decimal places.

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

Step: 3

blur-text-image

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

International Financial Management

Authors: Cheol Eun

9th Edition

1260788865, 9781260788860

More Books

Students also viewed these Finance questions

Question

Name the two major claimants who have claim on the firms assets.

Answered: 1 week ago

Question

a score of 70 or higher on the test?

Answered: 1 week ago