1) Andy is bearish on USL and decides to sell short 20, 000 shares at the current market price of $120 per shar e. The initial margin is 50%. The margin account pays n o interest. Three days later, the price of USL has risen t o $130. a. What is the remaining margin in the account? b. If the maintenance margin is 30%, will Andy receive a margin call? c. Calculate the rate of return on the short position.

1) Andy is bearish on USL and decides to sell short 20, 000 shares at the current market price of $120 per shar e. The initial margin is 50%. The margin account pays n o interest. Three days later, the price of USL has risen t o $130. a. What is the remaining margin in the account? b. If the maintenance margin is 30%, will Andy receive a margin call? c. Calculate the rate of return on the short position.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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O b. Equity. O c. Fixed income payments. O d. Security. Clear my choice Zinedine Zidane purchased 100 shares of Real Madrid common stock at $40 per share. Assume that the initial margin is 55% and the maintenance margin equals 25%. At which of these prices will Zidane face a margin call? O a. $29.3 Ob. $40 Q C. $24 O d. $15 近

Dée Trader opens a brokerage account and purchases 100 shares of Internet Dreams at $58 per share. She borrows $2,200 from her broker to help pay for the purchase. The interest rate on the loan is 12%. Required:a. What is the margin in Dée’s account when she first purchases the stock? b. If the share price falls to $48 per share by the end of the year, what is the remaining margin in her account? c. If the maintenance margin requirement is 30%, will she receive a margin call?multiple choice Yes No Correct d. 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.) Dée Trader opens a brokerage account and purchases 100 shares of Internet Dreams at $58 per share. She borrows $2,200 from her broker to help pay for the purchase. The interest rate on the loan is 12%. Required:a. What is the margin in Dée’s account when she first purchases the stock? b. If the share price falls to…
am. 105.
You purchase 2,000 shares of Nice Kick Group (NKG) at $45 per share by giving your broker $60,000 to establish your margin account and borrowing the rest from your broker. A year has passed (t=1), and NKG paid out a dividend of $2 per share. The maintenance margin is 25%. If you paid an interest at a rate of 8% on the funds you borrowed from your broker, what is the NKG price at which would trigger a margin call? A. $60.94 B. $36.25 C. $71.07 D. $18.93
36) can you please help with this question?
You purchase 800 shares of CUW at $71.51 using your full margin which as an initial margin of 70% (or 0.70). The maintenance margin is 45% (or 0.45). At what price will you get your margin call?" (Neglect any interest on the cash loan)
Miss Good wants to buy BAD stock, which is selling for $5 per share. She can buy on margin. The initial margin requirement is 40%, and the maintenance margin is 30%. If the price decreases to $3.5, will Miss Good receive a margin call? If she does receive a margin call, but she does nothing (because she is traveling to the Moon). Then how many shares should the broker sell to keep the margin above the maintenance margin?
If you have a margin account and your broker requires 40% initial margin, this means: a. borrow no more than 40% of the purchase price of the stock from your broker b. borrow no more than 60% of the purchase price of the stock from your broker
A stock is selling for $83 per share. One-month European calls and puts on the stock with the strike price of $80 are selling for $6 and $3, respectively. Kevin creates a straddle by buying 100 calls and 100 puts. What is his net profit if the stock price is $85 one month later? O A loss of $600 O A gain of $400 O A loss of $400 O A loss of $900
Jackie has posted $45,000 in her margin account. If intial margin requirements are 50%, and Turtle Industries is currently selling at $25 per share: How many shares of Turtle can Jackie purchase? What is Jackie’s profit if Turtle’s price rises to $40?
Suppose Tyler initially pays $76,000 toward the purchase of $108,000 worth of stock, borrowing the remaining balance from one of notorious brokers, Diego. In this case, Tyler’s initial percentage margin is closest to A. 70.37%. B. 60.50%. C. 39.50%. D. 29.63%. Clear my choice
Jedson Pinto is a trader for Articuno Capital. He decided to buy 100 shares of Tesla at $ 150 per share. Two-thirds of the purchase was paid with cash, with the remainder using borrowed money. One month later, the stock price increased to $165 per share. The annual interest rate is 2%. What is Pinto's levered return? Group of answer choices 19.67% 14.83% 10.00% 29.63%

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