Can you please answer this accounting question ? You purchase 550 shares of 2nd Chance Co. stock on margin at aprice of $55. Your broker requires you to deposit $15,500.1. Suppose you sell the stock at a price of $62. What is your return?What would your return have been had you purchased the stockwithout margin?2. What is your return if the stock price is $54 when you sell thestock?

Step 1: Define Margin CallInvestors investing money without using their own money by taking debt…

Answered: You purchase 550 shares of 2nd Chance…

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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Suppose that an investor purchases the common stock at the current market price of $58/share and simultaneously sells for $12 a call to buy the shares at the strike price of $50. At the expiration of the call, price of stock is $77. What is the net profit on the position for this investor? (Round your answer the nearest dollar, do not enter with the dollar sign)
An investor purchases a stock for $38 and a put for $.50 with a strike price of $35. The investor sells a call for $.50 with a strike price of $40. What is the maximum profit and loss for this position? Maximum profit
An investor tells their broker to short 1,000 shares of a stock that is currently priced at $50. Is the investor betting that the price will go up or down in this scenario? Where do the shares for a short sale come from?
Assume you purchase a share of stock for $50 at time t=0, and another share at $65 at time t= 1, and at the end of year 1 and year 2, the stock paid a $2.00 dividend. Also, at the end of year 2 you sold both shares for $70 each. What is the time-weighted rate of return? Give typing answer with explanation and conclusion
An investor purchases a stock for $38 and a put for $.50 with a strike price of $35. The investor sells a call for $.50 with a strike price of $40. What is the maximum profit and loss for this position? Draw the profit and loss diagram for this strategy as a function of the stock price at expiration.
An investor buys one share of a stock at $85 at t= 0. He buys an additional share for $90 at t= 1. The stock pays a dividend of $5 per share at t = 1 and t = 2. The investor sells both the shares at t = 2 for $100 each. Which of the following is most likely the time weighted rate of return? A. 11.34%. B. 14.18%. C. 14.94%.
You find that the bid and ask prices for a stock are $13.45 and $14.00, respectively. If you purchase or sell the stock, you must pay a flat commission of $15. If you buy 300 shares of the stock and immediately sell them, what is your total implied and actual transaction cost in dollars? Multiple Choice $180 O $15 O $195 $30
2. Suppose you buy shares of a stock worth OMR20000 and the initial margin is 50% and the maintenance margin is 30%. A. How much money must you pay the broker for the shares? How much have you borrowed from the broker? B. Suppose the price of the stock falls so that the shares are only worth OMR10000. What would be your nev account equity? C. How much money you need to give the broker to meet the maintenance margin?
In a dealer's market, the bid and ask price of a stock is $31.06 and $31.33, respectively. You sell 100 shares and pay a flat fee of $5 to your broker. Your selling price and the total transaction cost are: A. $31.06, $13.5 B. $31.33, $18.5 C. $31.33, $13.5 D. $31.06, $18.5
What about for these? (b) Suppose you have purchased some GameStop shares on margin at $5per share. You ask your broker to put in a limit sell order at $7, anda stop loss order at $4.50.i. What will happen if the stock price falls to $4.50?ii. What will happen if the stock price rises to $7?iii. Now suppose you had instead short-sold your GameStop shares(as in the first part of the question). What instructions mightyou give to your broker to minimise your losses and lock in yourgains?
You have the following share price of XYZ. DATE Price 2-Mar-2021 $100 3-Mar-2021 $60 4-Mar-2021 $40 5-Mar-2021 $100 Investor C bought 100 shares of XYZ on 2-Mar-2021, bought another 100 shares on 4-Mar-2021 and sold all the shares on 5-Mar-2021. Which answer is the closest value to the dollar-weighted average rate of return for the investor? A. 20% B. 0% C. 15% D. 25%

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