Question

You purchase 1,000 shares MSFT stock on margin at a price of $150/share. The margin rate...

You purchase 1,000 shares MSFT stock on margin at a price of $150/share. The margin rate is 5% continuously compounded. The margin loan is $50,000. You want to analyze your potential returns under three scenarios for MSFT’s stock price over the next year:

i) $120/share

ii) $150/share

iii) $180/share  

Fill in the table below to show your work.

Current Value

MSFT Stock Price 1-year Later

$120/share

$150/share

$180/share

Asset

Margin Loan

Equity

% Return


Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

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
You purchase 1,000 shares MSFT stock on margin at a price of $150/share. The margin rate...
You purchase 1,000 shares MSFT stock on margin at a price of $150/share. The margin rate is 5% continuously compounded. The margin loan is $50,000. You want to analyze your potential returns under three scenarios for MSFT’s stock price over the next year: i) $120/share ii) $150/share iii) $180/share   Fill in the table below to show your work. (15 points) Current Value MSFT Stock Price 1-year Later $120/share $150/share $180/share Asset Margin Loan Equity % Return Please copy and paste...
You purchase 1,000 shares MSFT stock on margin at a price of $150/share. The margin rate...
You purchase 1,000 shares MSFT stock on margin at a price of $150/share. The margin rate is 5% continuously compounded. The margin loan is $50,000. You want to analyze your potential returns under three scenarios for MSFT’s stock price over the next year: i) $120/share ii) $150/share iii) $180/share   Fill in the table below to show your work
You purchase 1,000 shares MSFT stock on margin at a price of $150/share. The margin rate...
You purchase 1,000 shares MSFT stock on margin at a price of $150/share. The margin rate is 5% continuously compounded. The margin loan is $50,000. You want to analyze your potential returns under three scenarios for MSFT’s stock price over the next year: i) $120/share ii) $150/share iii) $180/share   Fill in the table below to show your work. (15 points)
You purchased 200 shares of MSFT common stock on margin at $138.2 per share. Assume the...
You purchased 200 shares of MSFT common stock on margin at $138.2 per share. Assume the initial margin is 45% and the maintenance margin is 33%. You will get a margin call if the stock drops below ________. (Assume the stock pays no dividends and ignore interest on the margin loan.)
On February 3, 2020 you purchased 300 shares of MSFT common stock at $152 per share...
On February 3, 2020 you purchased 300 shares of MSFT common stock at $152 per share on margin. The initial margin is 60 percent. MSFT paid an amount of dividend of $2 per share on March 1, 2020. Today (April 3, 2020) you close your position at $158 per share. The interest rate is 12 percent per year compounded daily. a. Prepare an initial margin account. b. Determine the holding period rate of return of your investment. c. Determine the...
You purchase 100 shares of a stock at $120 per share, on a margin of 55...
You purchase 100 shares of a stock at $120 per share, on a margin of 55 percent. The stock declines to $90. a.What is your initial margin position (equity and loan)? b.When the price declines to $90 per share will you be called upon to put up more margin to meet the 35 percent minimum maintenance margin requirement? If yes, how much equity would you need to add to your account? If no, how much equity do you have over...
On February 20, you bought shares of stock in Microsoft (MSFT), at $107.15 per share. One...
On February 20, you bought shares of stock in Microsoft (MSFT), at $107.15 per share. One quarter later, in mid-May, you sold your shares at a price of $126.02/share. An instant before the sale, you received a dividend of $0.46/share.1 a. (i) Compute the total (or holding period) percentage return on your investment. (ii) Translate the quarterly return from part a(i) into an effective annual return. // Total return can be decomposed into two components. b. Calculate the dividend yield....
You sell SHORT 500 shares of MSFT that is currently selling at $25 per share. You...
You sell SHORT 500 shares of MSFT that is currently selling at $25 per share. You post 50% margin for the trade. What will be your rate of return if in one year MSFT is trading at $21 per share?
Mr. Sam opened an account to short-sell 50,000 shares of MSFT at $60 per share. Assume...
Mr. Sam opened an account to short-sell 50,000 shares of MSFT at $60 per share. Assume that the margin account pays no interest, and that the initial margin requirement was 60%. 1. What is the initial margin invested by Mr. Sam? 2. If after one year, the price of MSFT has risen from $60 to $66, and the stock has paid a dividend of $1 per share. a) What is the remaining margin in the account in dollars and as...
Suppose you purchase 1,150 shares of stock at $82 per share with an initial cash investment...
Suppose you purchase 1,150 shares of stock at $82 per share with an initial cash investment of $47,150. The call money rate is 5 percent and you are charged a 1.5 percent premium over this rate. Ignore dividends. a. Calculate your return on investment one year later if the share price is $90. Suppose instead you had simply purchased $47,150 of stock with no margin. What would your rate of return have been now? with margin = ? without margin...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT