Question

Dée Trader opens a brokerage account and purchases 100 shares of Internet Dreams at $60 per share. She borrows $2,000 from her broker to help pay for the purchase. The interest rate on the loan is 10%.

a. What is the margin in Dée’s account when she first purchases the stock?

b. If the share price falls to $50 per share by the end of the year, what is the remaining margin in her account? (Round your answer to 2 decimal places.)

c. If the maintenance margin requirement is 30%, will she receive a margin call?

• Yes

• No

d. What is the rate of return on her investment? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

Answer 1