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? Margin b. If the share price falls to $48 per share by the end of the year, what is the remaining margin in her account? Remaining margin c. If the maintenance margin requirement is 30%, will she receive a margin call? O Yes O No 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.) Rate of return
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? Margin b. If the share price falls to $48 per share by the end of the year, what is the remaining margin in her account? Remaining margin c. If the maintenance margin requirement is 30%, will she receive a margin call? O Yes O No 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.) Rate of return
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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Question
5
![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?
Margin
If the share price falls to $48 per share by the end of the year, what is the remaining margin in her account?
Remaining margin
c. If the maintenance margin requirement is 30%, will she receive a margin call?
O Yes
O No
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.)
Rate of return
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc47b8794-c2f2-4d04-9fad-4e8825beb778%2F634d8abb-7d2c-4c86-a19e-f0b0e3197cba%2Fv7n7de_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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?
Margin
If the share price falls to $48 per share by the end of the year, what is the remaining margin in her account?
Remaining margin
c. If the maintenance margin requirement is 30%, will she receive a margin call?
O Yes
O No
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.)
Rate of return
%
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