Question

Bill Campbell invested $4,000 and borrowed $4,000 to purchase shares in Walmart. At the time of investment, Walmart stock was selling for $62 a share.

**(a)** If Bill paid a $30 commission, how many
shares could he buy if he used *only* his own money and did
not use margin? **(Round your answer to 2 decimal
places.)**

Number of Shares: 64.51 Answer

**(b)** If Bill paid a $50 commission, how many
shares could he buy if he used his $4,000 and borrowed $4,000 on
margin to buy Walmart stock? **(Round your answer to 2
decimal places.)**

Number of Shares: 129.03 Answer

**(c)** Assuming Bill did use margin, paid a $90
total commission to sell his Walmart stock, and sold his stock for
$75 a share, how much profit did he make on his Walmart investment?
**(Use the number of shares computed in part (b) rounded to 2
decimal places. Round your final answer to 2 decimal
places.)**

**Total Profit after commission:**

**Please help me solve the last part of this
problem!**

Answer #1

Last year, Bill paid $4,000 in investment interest on
funds borrowed to purchase tax-free municipal bonds. If he had
$6,000 of tax-exempt interest last year, how much of his investment
interest may he deduct on his federal income tax
return

You’ve borrowed $15,000 on margin to buy shares in Ixnay, which
is now selling at $40 per share. Your account starts at the initial
margin requirement of 50%. The maintenance margin is 30%. Two days
later, the stock price falls to $38 per share.
a. Will you receive a margin call?
Yes
No
b. How low can the price of Ixnay shares fall
before you receive a margin call? (Round your
answer to 2 decimal
places.)
Margin
call will...

A brokerage firm charges
?$100
commission for every transaction? (purchase or? sale) made. A
person bought a block of stock containing over 400 shares for
?$10,900
including the commission. After one? year, he received a stock
dividend of
20
shares. He then sold all of his stock for
?$2
more per share than it had cost and made a profit of
?$1220
?(after paying the? commission). How many shares did he? buy,
and what was the original price of each?...

You decide to sell short 100 shares of Charlotte Horse Farms
when it is selling at its yearly high of $53. Your broker tells you
that your margin requirement is 55 percent and that the commission
on the purchase is $150. While you are short the stock, Charlotte
pays a $2.25 per share dividend. At the end of one year, you buy
100 shares of Charlotte at $42 to close out your position and are
charged a commission of $140...

You decide to sell short 300 shares of Charlotte Horse Farms
when it is selling at its yearly high of $57. Your broker tells you
that your margin requirement is 45 percent and that the commission
on the purchase is $495. While you are short the stock, Charlotte
pays a $2.30 per share dividend. At the end of one year, you buy
300 shares of Charlotte at $47 to close out your position and are
charged a commission of $480...

You decide to sell short 100 shares of Charlotte Horse Farms
when it is selling at its yearly high of $55. Your broker tells you
that your margin requirement is 60 percent and that the commission
on the purchase is $155. While you are short the stock, Charlotte
pays a $2.50 per share dividend. At the end of one year, you buy
100 shares of Charlotte at $42 to close out your position and are
charged a commission of $145...

Mr. Salman wants to buy maximum number of odd lot shares of Atif
Habib Investment Limited. The price per share is Rs. 75. Salman Buy
maximum number of Arif Habib odd lot share on margin. He paid Rs.
7200 in cash and borrowing the rest of odd lot shares from
brokerage firm at an annual interest rate of 12%. He sells the
shares for Rs. 90 per share after one year and repays the brokerage
firm borrowed amount and interest....

Problem 3-04
You decide to sell short 100 shares of Charlotte Horse Farms
when it is selling at its yearly high of $50. Your broker tells you
that your margin requirement is 60 percent and that the commission
on the purchase is $150. While you are short the stock, Charlotte
pays a $2.05 per share dividend. At the end of one year, you buy
100 shares of Charlotte at $36 to close out your position and are
charged a commission...

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)? ...

Todd Winningham IV has $5,400 to invest. He has been looking at
Gallagher Tennis Clubs Inc. common stock. Gallagher has issued a
rights offering to its common stockholders. Six rights plus $62
cash will buy one new share. Gallagher’s stock is selling for $80
ex-rights.
a-1. How many rights could Todd buy with his
$5,400? (Do not round intermediate calculations and round
your answer to the nearest whole number.)
a-2. Alternatively, how many shares of stock
could he buy with...

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