Suppose you purchase 500 shares of AAPL at $318. Initial margin is 60%. Maintenance margin is...

Suppose you purchase 500 shares of AAPL at $318. Initial margin is 60%. Maintenance margin is 35%. Answer the following questions:

How much money do you borrow with the initial transaction?
If AAPL stock rises to $347, calculate YOUR holding period return.
How far would AAPL stock have to fall for you to receive a margin call?
If your broker charges a call loan rate of 8%, how does that change your answer for c? (assume the price drop occurs in 1 year).

Solutions

Expert Solution

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

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Holly buys 500 shares of Untimely, Inc. at $44 on a 60% initial margin requirement. Maintenance...

Holly buys 500 shares of Untimely, Inc. at $44 on a 60% initial margin requirement. Maintenance margin is 35% and interest rates on margin loans are 11%. In 9 months, the stock is at $68. A. What is Holly's margin at 68? B. What is the excess and buying power at 68? C. When will she get a margin call? D. If she sells at 68, what is her HPR? E. If she had done the same trade on a cash...

You sell short 200 shares of FNH at $25/share. The initial margin is 60% and maintenance...

You sell short 200 shares of FNH at $25/share. The initial margin is 60% and maintenance margin 30%. If you sell all shares at $21, and receive $1.50/share dividend: a. What is your percent return? b. At what price would you receive a margin call?

You purchase 500 shares of Johns Incorporated at $50 per share using an initial margin of...

You purchase 500 shares of Johns Incorporated at $50 per share using an initial margin of 60%. Your maintenance margin is 25% and the minimum initial margin is 50%. A. How low can the stock price fall before you receive a margin call? B. If the stock price falls to $21 a share, how much additional equity must you add to your account?

Assume that your brokerage company requires an initial margin of 60% and a maintenance margin of...

Assume that your brokerage company requires an initial margin of 60% and a maintenance margin of 35%. Assume further that you short 800 shares of Jellyfish Corp. at $40 per share and the price increases to $56. a. Calculate your percentage loss based on your current and initial equity. b. Calculate the percentage change in the value of the stock. c. Show the account balance sheet if you use funds from your account to buy securities and decrease the loan.

Suppose a margin account has an initial margin requirement of 50% and a maintenance margin requirement...

Suppose a margin account has an initial margin requirement of 50% and a maintenance margin requirement of 25%. The account currently has a balance of $10000, so the initial buying power is $ ___ Suppose the total leverage is used to buy a stock at the price of $5.00/share. When the stock price falls below the critical price of $ ___ /share, a margin call will be sent to the account holder

Suppose the initial margin as established by Stock Market Regulators is 35%. The maintenance margin is...

Suppose the initial margin as established by Stock Market Regulators is 35%. The maintenance margin is 20%. Suppose that you have $15,000 in cash that you wish to invest in stock SYPHAX which currently sells for $60 per share. This stock does not pay dividends. 1. If you buy on margin, what is the maximum number of shares that you can purchase? Draw an assets-liabilities table for this transaction. 2. Ignoring interest expenses, at what stock price will you get...

At what price will you get a margin call if the maintenance margin is 30%? Initial margin = 50%

You have opened a stock portfolio account with a brokerage firm. You have only purchased stocks of Home Depot. You purchased 200 shares of HD at $178/share.At what price will you get a margin call if the maintenance margin is 30%? Initial margin = 50%

You purchase 200 shares of LPT Company at $100 per share using a 60% margin. The...

You purchase 200 shares of LPT Company at $100 per share using a 60% margin. The minimum initial margin is 50% and your maintenance margin is 25%. How low can the stock price fall before you receive a margin call?

QUESTION 13 Suppose that the initial margin for a given futures contract decreases, but the maintenance...

QUESTION 13 Suppose that the initial margin for a given futures contract decreases, but the maintenance margin remains the same. Which of the following is true, all else being equal? People who buy or sell this futures contract after the margin change have the potential for more financial leverage than before. The change in the leverage requirement can make the contract more affordable. The range in which losses can occur without a margin call being triggered will decrease. All of...

You have a margin account with a balance of $150,000. The initial margin deposit is 60%...

You have a margin account with a balance of $150,000. The initial margin deposit is 60% and Plymouth Industried is currently selling at $50 per share. How many shares of Plymouth can you buy? Show your calculations.

Subjects