i wont to this question answer General accounting question You buy 400 shares of stock at a price of $75 and aninitial margin of 45 percent. If the maintenance marginis 30 percent, at what price will you receive a margincall?

Step 1: Define Importance of Initial MarginThe initial margin is required to initiate a position in…

Answered: You buy 400 shares of stock at a price…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume an initial margin requirement of 50% and a maintenance margin of 30%. An investor buys 100 shares of stock on margin at $60 per share. The price of the stock subsequently drops to $50. a. What is the actual margin at $50? b. If the price declines to $49, is there a margin call? c. Assume that the price declines to $45. What is the amount of the margin call? At $35?
You purchase 500 shares of Compucon for $120 per share using a margin account. This transaction requires a 45% percent margin. a. What is the initial margin position? b. Assume the price of Compucon declines to $90 per share. If the minimum maintenance margin requirement is 25% will you receive a margin call? Why? Why not? Explain. c. What is your rate of return? d. Calculate the price that will trigger a margin call.
An investor short sells 100 shares of a stock for £50 per share. The initial margin is 50%. With a maintenance margin of 30%, what is the stock price at which there will be a margin call? If rather than short selling the shares you buy them on margin, explain how the definition of the margin would change.
The current price of a stock is $20 per share. You have $10,000 to invest. You borrow an additional $20,000 from your broker and invest $30,000 in the stock. If the maintenance margin is 30 percent, at what price will a margin call first occur? O A. $19.05 O B. $17.86 O C. $14.28
1. You purchase 100 shares for $50 a share ($5,000), and after a yearthe price rises to $60. What will be the percentage return on yourinvestment if you bought the stock on margin and the marginrequirement was? a.25 percent b.50 percent c.75 percent 2. Repeat Problem 1 to determine the percentage return on yourinvestment but in this case suppose the price of the stock falls to$40 per share. What generalization can be inferred from youranswers to Problems 1 and 2? 3. How many years will it take for 197000 dollars to grow to 554000 dollars if it is invested in an account with a quoted annual interest rate of 8 percent with monthly compounding interest?
Assume you buy 200 shares of stock at $70 per share on margin (40 percent). a. If the price risesto $95 per share, what is your percentage gain on the initial equity? b. What would the percentageloss on the initial equity be if the price had decreased to $40 ?
You want to purchase Stock A currently trading at $50 per share. You have $10,000 of your own to invest. You borrow an additional $10,000 from your broker and invest $20,000 in the stock. How far does the price of Stock A have to fall for you to get a margin call if the maintenance margin is 35%? Round your answer to two decimal places and enter the number without the dollar sign
A stock sells for $15 per share. You purchase 100 shares for $15 a share (i.e., for $1,500), andafter a year the price rises to $18.75 a) What will be the percentage return on your investment ifyou bought the stock on margin and the margin requirement was 65 percent? (Ignore commissions, dividends, and interest expense.) b) Rather than selling for $18.75, determine the percentage return on your investment if the price of the stock falls to $12.30 Based on your answers to both questions, what generalization on the use of marginaccounts can be inferred?
Suppose that you just short sold 100 shares of Quiet Minds stock for $86.00 per share. Required: a. If the initial margin requirement is 60%, how much equity must you invest?
You short sell 200 shares of stock at $48.23 per share and cover your short position three months later at $44.66 per share. If your broker's initial margin requirement is 65%, and the maintenance margin requirement is 45%, what is your rate of return? 100tne
You invested in 800 shares of stock for $49.20 a share. The initial margin requirement is 65 percent and the maintenance margin is 35 percent. What is the lowest the stock price can go before you receive a margin call? What is the lowest the stock price can go before you receive a margin call if both the initial and maintenance margins are 100%? What is the lowest the stock price can go before you receive a margin call if both the initial and maintenance margins are 0%? How would your answers to the three questions above change if you invested in 8000 shares instead of 800 shares?
Assume that an investor buys 100 shares of stock at $37 per share, putting up a 65% margin. a. What is the debit balance in this transaction? b. How much equity funds must the investor provide to make this margin transaction? c. If the stock rises to $59 per share, what is the investor's new margin position? a. The debit balance in this transaction is $ *** (Round to the nearest dollar.)

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You buy 400 shares of stock at a price of $75 and an initial margin of 45 percent. If the maintenance margin is 30 percent, at what price will you receive a margin call?