A B C D Stock Edita Telecom Egypt CIB Remco Price on April 7th 8 EGP 14.8 EGP 70.25 EGP 3.09 EGP Anticipated price on July 7th 11.35 EGP 11.25 EGP 55.75 EGP 4.13 EGP Dividends during period 2 EGP per share zero 3 EGP per share zero Number of shares invested 100 80 50 100 Assume that the investor chooses to hold stock A longer. The investor has a margin account, where the maintenance margin is 30%, initial margin is 45%. Suppose that the price of the stock then declines by 10%. a. Would the account then be restricted? Explain your answer and what that would mean. b. Does your account require a margin call if not, then at what price would a margin call be required? If YES move on to part C c. If your account now requires margin call then how much cash would you need to add?
A B C D Stock Edita Telecom Egypt CIB Remco Price on April 7th 8 EGP 14.8 EGP 70.25 EGP 3.09 EGP Anticipated price on July 7th 11.35 EGP 11.25 EGP 55.75 EGP 4.13 EGP Dividends during period 2 EGP per share zero 3 EGP per share zero Number of shares invested 100 80 50 100 Assume that the investor chooses to hold stock A longer. The investor has a margin account, where the maintenance margin is 30%, initial margin is 45%. Suppose that the price of the stock then declines by 10%. a. Would the account then be restricted? Explain your answer and what that would mean. b. Does your account require a margin call if not, then at what price would a margin call be required? If YES move on to part C c. If your account now requires margin call then how much cash would you need to add?
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
Related questions
Question
|
A |
B |
C |
D |
|
|
Stock |
Edita |
Telecom Egypt |
CIB |
Remco |
|
Price on April 7th |
8 EGP |
14.8 EGP |
70.25 EGP |
3.09 EGP |
|
Anticipated price on July 7th |
11.35 EGP |
11.25 EGP |
55.75 EGP |
4.13 EGP |
|
Dividends during period |
2 EGP per share |
zero |
3 EGP per share |
zero |
|
Number of shares invested |
100 |
80 |
50 |
100 |
- Assume that the investor chooses to hold stock A longer. The investor has a margin account, where the maintenance margin is 30%, initial margin is 45%. Suppose that the price of the stock then declines by 10%.
a. Would the account then be restricted? Explain your answer and what that would mean.
b. Does your account require a margin call if not, then at what price would a margin call be required? If YES move on to part C
c. If your account now requires margin call then how much cash would you need to add?
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