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Use the following to answer the next four questions One year ago today, Mike bought 1000 shares of Umbrella stock for $90/share on 55% margin. Mike's broker charged a 7% annual interest rate on borrowed funds and set the maintenance margin level at 40%. Today, Mike closed his position when the stock sold for $87/share. How much equity did Mike have to place into his account the day he opened it?

Use the following to answer the next four questions One year ago today, Mike bought 1000 shares of Umbrella stock for $90/share on 55% margin. Mike's broker charged a 7% annual interest rate on borrowed funds and set the maintenance margin level at 40%. Today, Mike closed his position when the stock sold for $87/share. How much equity did Mike have to place into his account the day he opened it?

Essentials Of Investments
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
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Use the following to answer the next four questions One year ago today, Mike bought 1000 shares of Umbrella stock for $90/share on 55% margin. Mike's broker charged a 7% annual interest rate on borrowed funds and set the maintenance margin level at 40%. Today, Mike closed his position when the stock sold for $87/share. How much equity did Mike have to place into his account the day he opened it?
Transcribed Image Text:Use the following to answer the next four questions One year ago today, Mike bought 1000 shares of Umbrella stock for $90/share on 55% margin. Mike's broker charged a 7% annual interest rate on borrowed funds and set the maintenance margin level at 40%. Today, Mike closed his position when the stock sold for $87/share. How much equity did Mike have to place into his account the day he opened it?
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