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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An investor bought 100 shares of a manufacturing company at $102 per share, with an initial margin of 60%. The investor was charged 9% margin interest annually. One year later, the investor sold the stock for $140 per share. The investor's holding period return is closest to:(a)54 % . (b)56 % . (c)123%. (d)223 %.
Isabella made an initial investment of $5000 in a trading account with a stock brokerage house. After a period of 17 months, the value of the account had increased to $6400. Assuming that there were no additions or withdrawals from the account, what was the nominal annual interest rate earned on the initial investment?
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%
On January 1 of this year, Skamania Company completed the following transactions (assume a 8% annual interest rate): (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use the appropriate factor(s) from the tables provided. a. Bought a delivery truck and agreed to pay $60,200 at the end of three years. b. Rented an office building and was given the option of paying $10,200 at the end of each of the next three years or paying $28,200 immediately. c. Established a savings account by depositing a single amount that will increase to $90,400 at the end of seven years. d. Decided to deposit a single sum in the bank that will provide 8 equal annual year-end payments of $40,200 to a retired employee (payments starting December 31 of this year). Required: a. What is the cost of the truck that should be recorded at the time of purchase? b. Which option for the office building results in the lowest present value? c. What single amount must be deposited in this account on January 1 of this year?…
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…
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
Seven months ago, you purchased 400 shares of stock on margin. The initial margin requirement on your account is 70 percent and the maintenance margin is 30 percent. The call money rate on the margin loan is 6.65 percent. The purchase price was $16 a share. Today, you sold these shares for $18.00 each. What is your annualized rate of return? O 64.64 percent O 56.87 percent O 33.35 percent O 42.77 percent O 29.39 percent O O
Derek purchased 845 shares of Texas Instruments Incorporated (TXN) for $172,540 in a margin account and posted initial margin of 45%. His broker, Justin, stated the maintenance margin requirement is 25%. The price of TXN, below which Derek would get a margin call, is closest to A. $100 B. $150 C. $200 D. $250
On January 15th, Sahar purchased 5,000 shares of National Cement Co. on a margin of $160 per share. On March 15th the price of National Cement stock declined to $140. The initial margin and maintenance margin requirements were 60% and 40% respectively. What is the actual market value (AM) on March 5th ? 54.29% 42.86 % 40% 60%

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