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Question #6: Margin [26 Points] Use the following scenario to answer Parts (a) - (c) You...
Indexes & Trading 1. The price of Facebook stock is currently at $56.51 and you decide...
Indexes & Trading
1. The price of Facebook stock is currently at $56.51
and you decide to buy 160 shares on margin. You borrow $1,500
from your broker and finance the remainder of the purchase with
your own cash.
a. What is your margin (as a decimal value)?
b. If the price rises to $60, and the interest you
have to pay on the broker's loan is 3%, what is the net return
(as a decimal value)?
c. If the...
need help with questions 3,4,5,6 please You have purchased 500 shares of MSFT (Microsoft) at $100...
need help with questions 3,4,5,6 please
You have purchased 500 shares of MSFT (Microsoft) at $100 per share using the maximum percentage of borrowed (marained) funds per FRB Regulation T. The maintenance margin can Tevel on your brokerage account is 25%. When will you receive a margin call on your account 2. Relative to question 1. If the maintenance margin call level on your account was 35% rather than 25%, what would your new margin call level be? 3. Relative...
You’ve just opened a margin account with $32,240 at your local brokerage firm. You instruct your...
You’ve just opened a margin account with $32,240 at your local brokerage firm. You instruct your broker to purchase 800 shares of Landon Golf stock, which currently sells for $62 per share. Suppose the call money rate is 5.5 percent and your broker charges you a spread of 1 percent over this rate. You hold the stock for six months and sell at a price of $69 per share. The company paid a dividend of $0.53 per share the day...
You bought 300 shares of stock of XOMO at $50 per share. You deposited $10,000 in...
You bought 300 shares of stock of XOMO at $50 per share. You deposited $10,000 in your account to partly _nance this purchase. The rest was loaned by the broker. What was the margin ratio in the account? A week later, the stock price had risen to $52. What was the margin ratio at this point? Ignore any accumulated interest on the loan.
1. You opened a margin account with borrowing $50,000 from your broker a year ago. Your...
1. You opened a margin account with borrowing $50,000 from your broker a year ago. Your account started at the initial margin requirement of 50%. With the margin account you bought ABC stock at $50 per share. The maintenance margin is 35%. Today, the stock price falls to $45 per share. Assume interest rate is 10%. What is the margin (your equity) in your account when you first purchase the stock? b. Will you receive a margin call? (Please consider...
1. You opened a margin account with borrowing $50,000 from your broker a year ago. Your...
1. You opened a margin account with borrowing $50,000 from your broker a year ago. Your account started at the initial margin requirement of 50%. With the margin account you bought ABC stock at $50 per share. The maintenance margin is 35%. Today, the stock price falls to $45 per share. Assume interest rate is 10%. What is the margin (your equity) in your account when you first purchase the stock? b. Will you receive a margin call? (Please consider...
Suppose you buy a round lot of Francesca Industries stock (100 shares) on 60 percent margin...
Suppose you buy a round lot of Francesca Industries stock (100 shares) on 60 percent margin when the stock is selling at $30 a share. The broker charges a 8 percent annual interest rate, and commissions are 4 percent of the stock value on the purchase and sale. A year later you receive a $0.70 per share dividend and sell the stock for $40 a share. What is your rate of return on Francesca Industries? Do not round intermediate calculations....
You purchase 800 shares of 2nd Chance Co. stock on margin at a price of $61....
You purchase 800 shares of 2nd Chance Co. stock on margin at a price of $61. Your broker requires you to deposit $28,000. 1. What is your margin loan amount? (Do not round intermediate calculations. Omit the "$" sign in your response.) Margin loan $ 2. What is the initial margin requirement? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) Margin requirement %
You are bullish on Curious Inc. stock and decide to purchase 200 shares at $30 per share. To do the transaction, you bor...
You are bullish on Curious Inc. stock and decide to purchase 200 shares at $30 per share. To do the transaction, you borrowed $2,000 from your broker on 9% interest. What is the remaining margin on your account, if the share price drops to $17.3 a year later?(Provide your answer in % rounded to two digits omitting the % sign)
. On January 1, you tell your broker to sell short 500 shares of Apple Inc....
. On January 1, you tell your broker to sell short 500 shares of Apple Inc. stock at a price of $100 per share. You use $30,000 cash to serve as a margin. (a) (5 points) How high can the stock price go before you get a margin call if the maintenance margin is 50%? (b) Assume that on April 1, a dividend of $4 per share was paid. On May 1, you covered the short sale by buying the...
Indexes & Trading
1. The price of Facebook stock is currently at $56.51
and you decide to buy 160 shares on margin. You borrow $1,500
from your broker and finance the remainder of the purchase with
your own cash.
a. What is your margin (as a decimal value)?
b. If the price rises to $60, and the interest you
have to pay on the broker's loan is 3%, what is the net return
(as a decimal value)?
c. If the...
need help with questions 3,4,5,6 please
You have purchased 500 shares of MSFT (Microsoft) at $100 per share using the maximum percentage of borrowed (marained) funds per FRB Regulation T. The maintenance margin can Tevel on your brokerage account is 25%. When will you receive a margin call on your account 2. Relative to question 1. If the maintenance margin call level on your account was 35% rather than 25%, what would your new margin call level be? 3. Relative...
1. You opened a margin account with borrowing $50,000 from your broker a year ago. Your account started at the initial margin requirement of 50%. With the margin account you bought ABC stock at $50 per share. The maintenance margin is 35%. Today, the stock price falls to $45 per share. Assume interest rate is 10%. What is the margin (your equity) in your account when you first purchase the stock? b. Will you receive a margin call? (Please consider...
1. You opened a margin account with borrowing $50,000 from your broker a year ago. Your account started at the initial margin requirement of 50%. With the margin account you bought ABC stock at $50 per share. The maintenance margin is 35%. Today, the stock price falls to $45 per share. Assume interest rate is 10%. What is the margin (your equity) in your account when you first purchase the stock? b. Will you receive a margin call? (Please consider...
Suppose you buy a round lot of Francesca Industries stock (100 shares) on 60 percent margin when the stock is selling at $30 a share. The broker charges a 8 percent annual interest rate, and commissions are 4 percent of the stock value on the purchase and sale. A year later you receive a $0.70 per share dividend and sell the stock for $40 a share. What is your rate of return on Francesca Industries? Do not round intermediate calculations....
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