Suppose you want to buy 10,000 shares of MegaWorld Corporation at a price of 4.00 You put up P10,000 and borrow the rest. What does your account balance sheet would look like? What is your margin? Assets Liabilities and Account Equity 10,000 shares of MegaWorld Corporation ₱ 40,000 Margin Loan ₱ 30,000 Account Equity ₱ 10,000 Total ₱ 40,000 Total ₱ 40,000 Margin = ₱ 10,000 / ₱ 40,000 = 0.25 = 25% 2. Supposed that in the previous problem you shorted 10,000 shares instead of buying. The initial margin is 60 percent. What does the account balance sheet look like?
Suppose you want to buy 10,000 shares of MegaWorld Corporation at a price of 4.00 You put up P10,000 and borrow the rest. What does your account balance sheet would look like? What is your margin? Assets Liabilities and Account Equity 10,000 shares of MegaWorld Corporation ₱ 40,000 Margin Loan ₱ 30,000 Account Equity ₱ 10,000 Total ₱ 40,000 Total ₱ 40,000 Margin = ₱ 10,000 / ₱ 40,000 = 0.25 = 25% 2. Supposed that in the previous problem you shorted 10,000 shares instead of buying. The initial margin is 60 percent. What does the account balance sheet look like?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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- Suppose you want to buy 10,000 shares of MegaWorld Corporation at a price of 4.00 You put up P10,000 and borrow the rest. What does your account
balance sheet would look like? What is your margin?
|
Assets |
Liabilities and Account Equity |
|
10,000 shares of MegaWorld Corporation ₱ 40,000 |
Margin Loan ₱ 30,000 |
|
|
Account Equity ₱ 10,000 |
|
Total ₱ 40,000 |
Total ₱ 40,000 |
Margin = ₱ 10,000 / ₱ 40,000
= 0.25
= 25%
2. Supposed that in the previous problem you shorted 10,000 shares instead of buying. The initial margin is 60 percent. What does the account balance sheet look like?
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