Question

2. Suppose you short sell 100 shares of stock X, which now sells for $200/share. What is your maximum possible loss? What happens to the maximum loss if you simultaneously place a "stop-buy" order at $210?

3. Suppose that you open a brokerage account and purchase 300 shares of stock Y at $40/share. You borrow $4,000 from your broker to help you pay for the purchase. The interest rate on your loan is 8%. What is the margin in your account when you first purchase the stock? If the share price falls to $30 per share, by the end of the year what is the remaining margin in your account? If the maintenance margin requirement is 30%, will you receive a margin call? What is the rate of return on your investment under the above scenario?

4. You are bullish on stock Z at $50/share and decide to invest. You have $5,000 of your own to invest and borrow an additional $5,000 from your broker at 8% yearly interest rate. You invest all of this in stock Z. What is your rate of return assuming that stock Z does not pay a dividend if the price of stock Z increases by 10% to $55/share? How far does the price of stock Z have to fall (assuming this happens immediately) for you to get a margin call assuming the maintenance margin is 30%.

Answer #1

1. What is the difference between an IPO and SEO?
2. Suppose you short sell 100 shares of stock X, which now sells
for $200/share. What is your maximum possible loss? What happens to
the maximum loss if you simultaneously place a "stop-buy" order at
$210?
3. Suppose that you open a brokerage account and purchase 300
shares of stock Y at $40/share. You borrow $4,000 from your broker
to help you pay for the purchase. The interest rate on...

you purchase 300 shares of square enix at $40 per share. To pay
the purchase, you borrow $4000 from broker
what is the % margin in your account when you first purchase
the stock
if the share price falls to $30 per share. if the maintenance
requirement is 30%, will u receive a margin call
if interest rate on loan over the borrowing period is 5%. what
is the rate of return on your account when you sell the stock...

You are bullish on Telecom stock. The current market price is
$55 per share, and you have $6,700 of your own to invest. You
borrow an additional $4,850 from your broker at an interest rate of
9.5% per year and invest $11,550 in the stock.
Required:
(a)
What will be your rate of return if the price of Telecom stock
goes up by 25% during the next year?
(b)
How far does the price of Telecom stock have to fall...

12A)
You short-sell 100 shares of Tuckerton Trading Co., now selling
for $44 per share. What is your maximum possible gain, ignoring
transactions cost?
Multiple Choice
$44
$56
unlimited
$4,400
12B)You’ve borrowed $30,222 on margin to buy shares in Ixnay,
which is now selling at $43.8 per share. You invest 1,380 shares.
Your account starts at the initial margin requirement of 50%. The
maintenance margin is 35%. Two days later, the stock price changes
to $54 per share.
a. Will...

You are bullish on Telecom stock. The current market price is
$30 per share, and you have $3,000 of your own to invest. You
borrow an additional $3,000 from your broker at an interest rate of
6.5% per year and invest $6,000 in the stock.
a. What will be your rate of return if the
price of Telecom stock goes up by 8% during the next year? (Ignore
the expected dividend.) (Round your answer to 2 decimal
places.)
b. How...

You are bullish on Telecom stock. The current market price is
$400 per share, and you have $25,000 of your own to invest. You
borrow an additional $25,000 from your broker at an interest rate
of 7% per year and invest $50,000 in the stock.
a. What will be your rate of return if the
price of Telecom stock goes down by 12% during the next year? The
stock currently pays no dividends. (Negative value should
be indicated by a...

You are bullish on Google stock. The current market price is $52
per share, and you have $13,000 of your own to invest. You borrow
an additional $13,000 from your broker at an interest rate of 8.2%
per year and invest $26,000 in the stock.
a. What will be your rate of return if the
price of Google stock goes up by 10% during the next year? (Ignore
the expected dividend.) (Round your answer to 2 decimal
places.)
b. How...

You just bought 200 shares of a stock priced at $48 per share
using 50% initial margin. The broker charges 4% annual interest
rate on the margin loan and requires a 30% maintenance
margin. One year later stock price dropped to 31 and you
recieved margin call, to restore your margin to the initial margin
level, how much would you need to deposit?
Answer ___+/- ____
You sell short 100 shares of company A which are currently
selling at $32 per...

1)
You sell short 200 shares of Doggie Treats Inc. that are currently
selling at $25 per share. You post the 50% margin required on the
short sale. If your broker requires a 30% maintenance margin, at
what stock price will you get a margin call? (You earn no interest
on the funds in your margin account, and the firm does not pay any
dividends.)
A.
$32.25
B.
$31.50
C.
$28.85
D.
$35.71
2) You purchased 250 shares of common...

You short-sell 50 shares of XYZ stock at $100 per share. Your
broker's initial margin requirement is 50% of the value of your
short position. You put up cash to satisfy the initial margin
requirement.
a) What will be your rate of return (after 1 year) if XYZ stock
sells at $110 a share? Assume that you do not earn any interest on
your funds in the margin account and that the stock pays a dividend
of $1.50 a share...

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