1.) Assume you purchased 100 shares of Zoomer Corp's stock on margin at the beginning of...

1.) Assume you purchased 100 shares of Zoomer Corp's stock on margin at the beginning of the year for $40 per share. You use $2500 of your own funds and borrow $1500 from the broker. Maintenance Margin requirement is 25%.

a) At what price would you receive a margin call (ignore interest)?

b) Annual interest cost is 4% on the margin account loan. What is your rate of return on your investment if Zoomer's stock is $44.50 per share after one year?

c) What is the margin perfect (equity/assets) in your account at the end of the year?

Expert Solution

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

jeff jeffy answered 1 year ago

You purchased 100 shares of IBM common stock on margin at $151 per share. Assume the...

You purchased 100 shares of IBM common stock on margin at $151 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin. Round your answer to the nearest cent (2 decimal places).

You purchased 100 shares of Express Scripts common stock on margin at $70.38 per share. Assume...

You purchased 100 shares of Express Scripts common stock on margin at $70.38 per share. Assume the initial margin is 50% and the maintenance margin is 30%. One year later, the stock price closes at $71.75. If the broker’s call loan rate is 2.00%, what is your return on equity? Can I please get a step by step breakdown so that I can better understand the process involved? Thank you.

You purchased 100 shares of common stock on margin for $150 per share. The initial margin...

You purchased 100 shares of common stock on margin for $150 per share. The initial margin requirement is 65%, the maintenance margin requirement is 40%. Find your rate of return in % if you sell the stock at $180 per share exactly 1 year later if interest rate on margin loan is 10%

1) Assume you buy 100 shares of stock at $40 per share on margin. The initial...

1) Assume you buy 100 shares of stock at $40 per share on margin. The initial margin is 50%. If the price rises to $55 per share, what is your percentage gain on the initial equity?

You purchased 1000 shares of Dell stock on margin at $70 per share. Assume the initial...

You purchased 1000 shares of Dell stock on margin at $70 per share. Assume the initial margin is 50% and the maintenance margin is 40%. Assume the stock pays no dividends, and ignore interest on the margin loan. a.What is the rate of return on his investment if the price rises to $85 per share? b.What is the margin if Stock price falls to $60 per share, will the investor receive a margin call ? c.How far can the stock...

An investor purchased 200 shares of stock at $100 per share on 65% margin. Suppose the...

An investor purchased 200 shares of stock at $100 per share on 65% margin. Suppose the maintance margin is 40% at what price does the investor get a margin call? Regarding the previous question, if the price declines to $70 per share whats the return to the investors equity? What if the stock price rises to $150 per share? ignore interest and transaction costs.

Assume you sold short 100 shares of common stock at $70 per share. The initial margin...

Assume you sold short 100 shares of common stock at $70 per share. The initial margin is 30%. What would be the maintenance margin if a margin call is made at a stock price of $85? A) 40.5% B) 20.5% C) 35.5% D) 23.5% E) none of the above 53. You sold short 100 shares of common stock at $45 per share. The initial margin is 30%. At what stock price would you receive...

You purchased 250 shares of a particular stock at the beginning of the year at a...

You purchased 250 shares of a particular stock at the beginning of the year at a price of $87.25. The stock paid a dividend of $1.15 per share, and the stock price at the end of the year was $94.86. (4 points) a) What was the dividend yield? b) What was the capital gains yield?

You purchased 250 shares of common stock on margin for $45 per share. The initial margin...

You purchased 250 shares of common stock on margin for $45 per share. The initial margin is 60%, and the stock pays no dividend. Your rate of return would be ________ if you sell the stock at $48 per share. Ignore interest on margin. 0.132 0.238 0.111 0.208

You bought 1000 shares of ABC stock on margin at the beginning of April 2012 at...

You bought 1000 shares of ABC stock on margin at the beginning of April 2012 at $4.80 per share. You deposited a 50% margin which was higher than the initial margin of 40%. The prime rate of interest was 2.5% and your broker charged 125 basis points above the prime rate on margin loan (assume simple interest rate). The stock paid a cash dividend of $0.12 per share in February and August of 2012. Your broker charged a flat fee...

Question