Question

An investor purchased 60 shares of APT at $78 on margin. The initial margin requirement is...

An investor purchased 60 shares of APT at $78 on margin. The initial margin requirement is 35%, and the maintenance margin requirement is 25%. Any amount borrowed incurs an interest rate of 5% p.a. What is the amount the investor can borrow and what is the price APT can fall to at the end of year before margin call is triggered?

Select one:

A. $3 042, $71.90

B. $3 510, $71.90

C. $3 042, $70.98

D. $3 510, $70.98

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
2. An investor purchases 500 shares of ABC stock on margin. The current price of ABC...
2. An investor purchases 500 shares of ABC stock on margin. The current price of ABC stock is $75 per share, the initial margin requirement is 60% and the maintenance margin requirement is 35%. A)   What is the dollar amount of the loan the investor receives from her broker for this margin purchase? B)    How far can the stock price fall before the investor gets a margin call?
Your brother purchased 400 shares of stock for $28.50 a share. The initial margin requirement is...
Your brother purchased 400 shares of stock for $28.50 a share. The initial margin requirement is 60% and the maintenance margin is 30%. What is the maximum percentage decrease that can occur in the stock price before you receive a margin call?
You purchased 800 shares of stock for $49.20 a share. The initial margin requirement is 65...
You purchased 800 shares of stock for $49.20 a share. The initial margin requirement is 65 percent and the maintenance margin is 35 percent. What is the lowest the stock price can go before you receive a margin call? What is your return if price per share goes up to $60 (assume no interest)? $9.27; 40% $26.49; 25.67% $17.22; 50% $26.49; 33.77%
Three months ago, you purchased 100 shares of stock on margin. The initial margin requirement on...
Three months ago, you purchased 100 shares of stock on margin. The initial margin requirement on your account is 70 percent and the maintenance margin is 40 percent. The call money rate is 4.2%/year and you pay 2.0% above that rate. The purchase price was $22 per share. Today, you sold these shares for $25.00 each. What is your annualized rate of return?
Using a margin account, you purchased 100 shares at a price of $100 with an initial...
Using a margin account, you purchased 100 shares at a price of $100 with an initial margin requirement of 60% and a maintenance margin requirement of 30% on the margin position. You would get a margin call at a stock price of __________ and would have to deposit _______ with the broker. Group of answer choices $57.14; $1,714 $57.14; $3,428 $30.77; $2,154 $30.77; $3,077 $57.14; $4,000
you purchased 200 shares of hookah pens on margin at $50/share. the initial margin is 50%...
you purchased 200 shares of hookah pens on margin at $50/share. the initial margin is 50% and the maintenance margin is 30%. at what price does hookah pens fall to in order to receive a margin call (assume no dividends and ignore interest on the margin loan
You sell 100 short shares of stock at $60 per share. Initial Margin Requirement (IMR%)= 50%....
You sell 100 short shares of stock at $60 per share. Initial Margin Requirement (IMR%)= 50%. Maintenance margin for short sale of stock with price > $16.75 is 30% of market (or position) value QUESTIONS: 1. What is the price for margin call?   2. What is the new market value of the position?(Note: we haven’t deposited any add’l cash yet)
An investor purchased 400 shares of a company at $30 per share. The stock was bought...
An investor purchased 400 shares of a company at $30 per share. The stock was bought on 65 percent margin (35 percent of the purchase amount was borrowed). One month later, the investor had to pay interest on the amount borrowed at a rate of 3 percent per month. At that time, the investor received a dividend of $0.50 per share. Immediately after receiving the dividend, he sold the shares at $35 per share. The investor paid total commissions of...
An investor purchased 400 shares of a company at $30 per share. The stock was bought...
An investor purchased 400 shares of a company at $30 per share. The stock was bought on 65 percent margin (35 percent of the purchase amount was borrowed). One month later, the investor had to pay interest on the amount borrowed at a rate of 3 percent per month. At that time, the investor received a dividend of $0.50 per share. Immediately after receiving the dividend, he sold the shares at $35 per share. The investor paid total commissions of...
You borrowed $10,000 on margin to buy shares in Pai Corp, which is now selling at...
You borrowed $10,000 on margin to buy shares in Pai Corp, which is now selling at $20 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $15 per share. A. What is the initial value of stock? (Hint: use initial margin=Equity/value of stock) B. What is your margin at $15 (round to nearest percent: 54.72%>>55%) ?   C. Will you receive a margin call (Yes/No)?  ...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT