Question

Dée Trader opens a brokerage account and purchases 400 shares of Internet Dreams at $28 per share. She borrows $3,000 from her broker to help pay for the purchase. The interest rate on the loan is 12%.

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

Margin

$

b-1.	If the share price falls to $18 per share by the end of the year, what is the remaining margin in her account? (Round your answer to 2 decimal places.)

Remaining margin

%

b-2.

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

	Yes
	No

c.	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.)

Rate of return

%

Answer 1