Question
In: Finance
Given the following information, please estimate a) the margin trading return if the stock price increases...
Given the following information, please estimate a) the margin trading return if the stock price increases to $70; b) the margin trading return if the stock price decreases to $40; c) the price which triggers the margin call.
The margin requirement is 70%.
The margin call is set at 30%.
Stock price: $ 45
Interest rate on margin borrowing (call rate): 6%
Expected dividend: $5
Holding period: 1 year
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jeff jeffy answered 1 year agoRelated Solutions
Given the following information, The margin requirement=50%. The margin call ratio = 30%. Stock price: $...
Given the following information,
The margin requirement=50%.
The margin call ratio = 30%.
Stock price: $ 60
Interest rate on margin borrowing (call rate): 5%
Expected dividend: $2
Holding period: 1 year
Please estimate
a) the margin trading return if the stock price
increases to $80
b) the margin trading return if the stock price
decreases to $45
c) the price which triggers the margin
call.
d) If the margin-call triggering price is $25,
please estimate the margin requirement, given...
Given the following information, The margin requirement=50%. The margin call ratio = 30%. Stock price: $...
Given the following information,
The margin requirement=50%.
The margin call ratio = 30%.
Stock price: $ 60
Interest rate on margin borrowing (call rate): 5%
Expected dividend: $2
Holding period: 1 year
Please estimate a) the margin trading return if the stock price
increases to $80
b) the margin trading return if the stock price decreases to
$45
c) the price which triggers the margin call.
d) If the margin-call triggering price is $25, please estimate
the margin requirement, given...
Given the following information, The margin requirement=50%. The margin call ratio = 30%. Stock price: $...
Given the following information,
The margin requirement=50%.
The margin call ratio = 30%.
Stock price: $ 60
Interest rate on margin borrowing (call rate): 5%
Expected dividend: $2
Holding period: 1 year
What are...
1) the margin trading return if the stock price increases to
$80
2) the margin trading return if the stock price decreases to
$45
3) the price which triggers the margin call.
4) If the margin-call triggering price is $25, please estimate
the...
Given the following information, please estimate the expected return and risk for the portfolio Security Security...
Given the following information, please estimate the expected
return and risk for the portfolio
Security
Security 1
Security 2
Security 3
E(R)
0.015
0.02
0.05
Weight
33%
33%
34%
Security 1
Security 2
Security 3
Security 1
Var=0.05
Corr=0.5
Corr=0.3
Security 2
Var=0.06
Corr=0.6
Security 3
Var=0.07
You are given the following information: State of Economy Return on Stock A Return on Stock...
You are given the following information:
State of
Economy
Return on
Stock A
Return on
Stock B
Bear
.109
−
.052
Normal
.108
.155
Bull
.080
.240
Assume each state of the economy is equally likely to happen.
Calculate the expected return of each stock. (Do not round
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal places, e.g., 32.16.)
Expected return
Stock A
%
Stock B
%
Calculate the standard deviation of each stock. (Do...
You are given the following information: State of Economy Return on Stock A Return on Stock...
You are given the following information: State of Economy Return
on Stock A Return on Stock B Bear 0.103 -0.046 Normal 0.114 0.149
Bull 0.074 0.234 Assume each state of the economy is equally likely
to happen. a. Calculate the expected return of each stock. (Do not
round intermediate calculations and enter your answers as a percent
rounded to 2 decimal places, e.g., 32.16.) b. Calculate the
standard deviation of each stock. (Do not round intermediate
calculations and enter your...
The following information is given for a stock. Investors assume that the return of the stock...
The following information is given for a stock. Investors assume
that the return of the stock is best explained by a two-factor
model that includes the market factor and a second risk factor.
Using a dividend discount model, what is the price for this
stock?
Stock covariance with the market= 0.5
Market variance = 0.25
Stock covariance with a second risk factor= 0.6
variance of the second factor= 0.3
Market Premium:3%
Second factor risk premium=1%
Risk free rate =2 %...
The following information is given for a stock. Investors assume that the return of the stock...
The following information is given for a stock. Investors assume
that the return of the stock is best explained by a two-factor
model that includes the market factor and a second risk factor.
Using a dividend discount model, what is the price for this
stock?
Stock covariance with the market= 0.5
Market variance = 0.25
Stock covariance with a second risk factor= 0.6
Variance of the second factor= 0.3
Market Premium:3%
Second factor risk premium=1%
Risk free rate =2 %...
The following information is given for a stock. Investors assume that the return of the stock...
The following information is given for a stock. Investors
assume that the return of the stock is best explained by a
two-factor model that includes the market factor and a second risk
factor. Using a dividend discount model, what is the price for this
stock?
Stock covariance with the market= 0.5
Market variance = 0.25
Stock covariance with a second risk factor= 0.6
Variance of the second factor= 0.3
Market Premium:3%
Second factor risk premium=1%
Risk free rate =2 %...
The following information is given for a stock. Investors assume that the return of the stock...
The following information is given for a stock. Investors assume
that the return of the stock is best explained by a two-factor
model that includes the market factor and a second risk factor.
Using a dividend discount model, what is the price for this
stock?
Stock covariance with the market= 0.5
Market variance = 0.25
Stock covariance with a second risk factor= 0.6
Variance of the second factor= 0.3
Market Premium:3%
Second factor risk premium=1%
Risk free rate =2 %...
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