Sara Sanders purchased 50 shares of Apple stock at $190.28 per share using the prevailing minimum initial marginrequirement of 56%. She held the stock for exactly 4 months and sold it without any brokerage costs at the end of that period.During the 4-month holding period, the stock paid $1.41 per share in cash dividends. Sara was charged 5.5% annual intereston the margin loan. The minimum maintenance margin was 25%.a. Calculate the initial value of the transaction, the debit balance, and the equity position on Sara's transaction.b. For each of the following share prices, calculate the actual margin percentage, and indicate whether Sara's margin accountwould have excess equity, would be restricted, or would be subject to a margin call:(1) $174.44, (2) $207.39, and (3) $122.81.c. Calculate the dollar amount of (1) dividends received and (2) interest paid on the margin loan during the 4-month holdingperiod.d. Use each of the following sale prices at the end of the 4-month holding period to calculate Sara's annualized rate of returnon the Apple stock transaction:(1) $185.49, (2) $194.88, and (3) $205.63.a. The initial value of the transaction is $(Round to the nearest cent.)

Equity or ordinary shares are legal contracts granting shareholders ownership rights in the…

Answered: Sara Sanders purchased 50 shares of…

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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Amelia purchased 500 shares of Xienna stock at RM50 per share. She owns RM15,000 to invest and the minimum initial margin requirement is 50%. She held the stock for exactly four months and sold it without any brokerage cost at the end of that period. During the four-month holding period, the stock paid RM1.50 per share in cash dividends. Amelia was charged 8% annual interest on the margin loan. The minimum maintenance margin was 30%. While her husband, Afiq prefer to trade in stock futures. Afiq are bearish on Sunway stock and decide to short sells 300 shares. The initial margin is 50%, and the maintenance margin is 35%. A year later, Sunway price has risen from RM25 to RM37, and the stock has paid a dividend of RM2.00 per share. Required: a. Calculate the initial value of Amelia investment and borrowing amounts. b. What is the percentage margin when she first purchases the stock? c. Calculate the (1) dividend received and (2) interest paid on the margin loan during the four-month…
On January 1, you sold short 100 shares of XYZ stock at $20 using a 50% initial margin. The interest rate on the margin account is 10% annually. On April 1 (in three-months), you covered the short sales by buying stock at a price of $15 per share. You paid 50 cents per share in commissions for each transaction. Assume you received interest on all your assets, i.e. the sum of the short sale proceeds and the margin. What is the value of your assets and equity on April 1? What is the total rate of return on equity?
Tammy Jackson purchased 109 shares of All-American Manufacturing Company stock at $33.60 a share. One year later, she sold the stock for $41 a share. She paid her broker a $35 commission when she purchased the stock and a $43 commission when she sold it. During the 12 months she owned the stock, she received $198 in dividends. Calculate Tammy's total return on this investment. Note: Round all intermediate calculations and final answer to the nearest whole number. Total return
A year ago, Kim Altman purchased 190 shares of BLK, Inc. for $27.00 on margin. At that time the margin requirement was 60 percent. If the interest rate on borrowed funds was 6 percent and she sold the stock for $35.50, what is the percentage return on the funds she invested in the stock? Round your answer to two decimal places. %
Laureen purchased 1,000 shares of Apple stock for $80 per share with an initial margin requirement of 65% and a maintenance margin of 40%. Assume the stock price falls to $30 per share, how much equity must Laureen contribute? $2 per share $8 per share $10 per share $12 per share
On March 1st, Frank opens a brokerage account and sell shorts 200 shares of Doggie Treats Inc. at $60 per share. The initial margin requirement is 50%. a. What is the margin in Frank’s account when he first sells the stock? b. The stock pays a cash dividend of $1 on March 28th, and the share price falls to $50 per share by the end of March, what is the remaining equity in his account? c. What is the monthly rate of return on his margined position?
Ghaith purchased 200 shares of stock at $19 using his 70% margin account. his maintenance margin is 40%. At what price will Ghaith receive a margin call?
Jeff Krause purchased 1,000 shares of a speculative stock in January for $2.09 per share. Six months later, he sold them for $9.62 per share. He uses an online broker that charges him $10.00 per trade. What was Jeff's annualized HPR on this investment? Jeff's annualized HPR on this investment is %. (Round to the nearest whole percent.)
In June an investor purchased 250 shares of Oracle (an information technology company) stock at $18 per share. In August she purchased an additional 250 shares at $27 per share. In November she purchased an additional 590 shares at $29 per share. What is the weighted mean price per share? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) The weighted mean is $
Wanda Sotheby purchased 170 shares of Home Depot stock at $150 a share. One year later, she sold the stock for $55 a share. She paid her broker a commission of $44 when she purchased the stock and a commission of $51 when she sold it. During the 12 months she owned the stock, she received $138 in dividends. Calculate Wanda’s total return on this investment.
Shaylash bought 250 shares of stock at $31.38 per share. Several months later he sold the stock at $45.65 per share. His broker charges 4% commission for round lots and 5% for odd lots. Calculate the gain or loss on the transaction. (Show loss in parentheses)
Mary purchased 500 shares at the price of $41 using her margin account and a 50% initial margin. Since then the stock price declined to $29 per share. How much money does Mary need to deposit into her margin account to comply with the maintenance margin requirement of 35%? $1,075 $1,325 $825 $560

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