You've borrowed $27,950 on margin to buy shares in Ixnay, which is now selling at $43.0 per share. You invest 1,300 shares. Youraccount starts at the initial margin requirement of 50%. The maintenance margin is 35%, Two days later, the stock price changes to$50 per share.Required:a. Will you receive a margin call?O YesO Nob. At what price will you receive a margin call? (Round your answer to 2 decimal places.)Stock price

Margin call refers to the excess money required to maintain the account for stock trading. Before…

Answered: You've borrowed $27,950 on margin to…

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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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
7. You invest $7,873 in stock and receive $102, $123, $121, and $155 in dividends over the following 4 years. At the end of the 4 years, you sell the stock for $11,900. What was the IRR on this investment? Review Only Click the icon to see the Worked Solution (Calculator Use). Click the icon to see the Worked Solution (Spreadsheet Use). The IRR on this investment is %. (Round to the nearest whole percent.)
Refer to the following chart. An investor (a day trader) always buys 500 shares of stock at the market close price and sells them at the last sale price, paying a $30 commission per transaction. The stock the trader bought is MSLV. (a) Find the total cost.$ (b) Find the return for the day.$ (c) Find the percent of return. (Round your answer to one decimal place.)
Suppose you can buy 983 shares of Vertex Pharmaceuticals Incorporated (VRTX) stock on margin at $167 per share. Your initial margin is 51% and you borrow at the 7 percent. You sell your VRTX shares 6 months later for $185 per share. There were no dividends paid and the prices reflect commissions paid. What is your percent return if you buy on margin? [Enter the answer in as a percent (e.g., 5.55% = 5.55) - not a decimal]
An investor opens a margin account with an initial deposit of $5500. He then purchases 870 shares of a stock at $44. His margin account has a maintenance margin requirement of 30%. Ignoring commissions and interest, IF the price changed to 27 WHAT IS YOUR NEW EQUITY The correct answer is AT WHAT PRICE YOU WILL GET A MARGIN CALL PRICE?
You purchase 110 shares for $40 a share ($4,400), and after a year the price falls to $35. Calculate the percentage return on your investment if you bought the stock on margin and the margin requirement was (ignore commissions, dividends, and interest expense): 15 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. % 50 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. % 75 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. %
Suppose that Kaka Plc currently is selling at $50 per share. You buy 900 shares using $22,050 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 7%. Required If the maintenance margin is 20%, how low can Kaka Plc’s price fall before you get a margin call? (Round your answer to 2 decimal places.)
Ef 104.
In you cash account, you buy 100 shares of XYZ Corporation at a price of $10 per share. Two months later, XYZ pays a dividend $0.21 per share. You sell all 100 shares of XYZ three months later at a price of $12 per share. If you wanted to lever up the returns of this trade, you could have executed it in your _____ account. A) cash B) margin C) brokerage D) bank
Verify and answer my question
You buy stock on margin in your brokerage account when it is trading at $42.76 per share. You have $4050 in equity (cash) in your account and buy 195 shares. Your broker makes a margin loan so you can pay the difference at an annual rate of 0.0825 One year later the stock price is 44.9 What is the margin percentage in the account one year after the trade is made? Group of answer choices 0.4933 0.4698 0.4247 0.4447 0.4014
Suppose that Xtel currently is selling at $46 per share. You buy 250 shares using $8,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 6%. Required: a. What is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes to: (i) $48.76; (ii) $46; (iii) $43.24? What is the relationship between your percentage return and the percentage change in the price of Xtel? b. If the maintenance margin is 25%, how low can Xtel's price fall before you get a margin call? c. How would your answer to (b) change if you had financed the initial purchase with only $5,750 of your own money? d. What is the rate of return on your margined position (assuming again that you invest $8,000 of your own money) if Xtel is selling after 1 year at: (i) $48.76; (ii) $46; (iii) $43.24? What is the relationship between your percentage return and the percentage change in the price of Xtel? Assume that Xtel…

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