Stock price after the splitting 3 for 2 stocks. Introduction: Stock Split: When a company has large number of outstanding shares then the board of directors decide to issue more shares to the current shareholders thus, it results in decreasing the number of outstanding shares and increasing the shares prices.

Question

Mary decides to buy a Treasury note futures contract for delivery of $100,000 face amount in September, at a price of 120′24.0. At the same time, Eric decides to sell a Treasury note futures contract if he can get a price of 120′24.0 or higher. The exchange, in turn, agrees to sell one Treasury note contract to Mary at 120′24.0 and to buy one contract from Eric at 120′24.0. The price of the Treasury note decreases to 120′10.5. Calculate Eric's balance on margin account. Assume that initial margin is $1,890. Please note that loss should be entered with minus sign. Round the answer to two decimal places.

Answer 1

Question

Chapter 14, Problem 2P

Summary Introduction

To calculate: Stock price after the splitting 3 for 2 stocks.

Introduction:

Stock Split:

When a company has large number of outstanding shares then the board of directors decide to issue more shares to the current shareholders thus, it results in decreasing the number of outstanding shares and increasing the shares prices.

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Mary decides to buy a Treasury note futures contract for delivery of $100,000 face amount in September, at a price of 120′24.0. At the same time, Eric decides to sell a Treasury note futures contract if he can get a price of 120′24.0 or higher. The exchange, in turn, agrees to sell one Treasury note contract to Mary at 120′24.0 and to buy one contract from Eric at 120′24.0. The price of the Treasury note decreases to 120′10.5. Calculate Eric's balance on margin account. Assume that initial margin is $1,890. Please note that loss should be entered with minus sign. Round the answer to two decimal places.

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