(A) Adequate information The investor borrowed $20,000 to purchase shares of Worley. The price at which the stock is currently prevailing accounts for $40. The initial requirement of margin is 50%. The maintenance margin accounts for 35%. There is a fall in price of share after two days and accounts for $35 per share. To determine: Whether the investor will receive the margin call Introduction: The margin in the trading account refers to the minimum amount of money, which the investor is required to maintain in his account in the form of margin for placing a trade order.

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Answer 1

Question

Chapter 3, Problem 15PS

Summary Introduction

(A)

Adequate information

The investor borrowed $20,000 to purchase shares of Worley. The price at which the stock is currently prevailing accounts for $40. The initial requirement of margin is 50%. The maintenance margin accounts for 35%. There is a fall in price of share after two days and accounts for $35 per share.

To determine:

Whether the investor will receive the margin call

Introduction:

The margin in the trading account refers to the minimum amount of money, which the investor is required to maintain in his account in the form of margin for placing a trade order.

Summary Introduction

(B)

To calculate:

The price of the stock that enables the investor to get margin call

Introduction:

Margin call comes into picture when the investor is required to deposit additional securities or money so that the margin in the investor's account stands equivalent to the minimum margin requirement.

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You’ve borrowed $14,000 on margin to buy shares in Ixnay, which is now selling at $56 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $51 per share. a. Will you receive a margin call? Yes No b. How low can the price of Ixnay shares fall before you receive a margin call? (Round your answer to 2 decimal places.)

You’ve borrowed $22,000 on margin to buy shares in Ixnay, which is now selling at $32 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 30%. Two days later, the stock price falls to $22 per share. a. Will you receive a margin call? multiple choice No Yes b. How low can the price of Ixnay shares fall before you receive a margin call? (Round your answer to 2 decimal places.) Margin call will be made as price _______ or lower.

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?

Answer 2

Question

Chapter 3, Problem 15PS

Summary Introduction

(A)

Adequate information

The investor borrowed $20,000 to purchase shares of Worley. The price at which the stock is currently prevailing accounts for $40. The initial requirement of margin is 50%. The maintenance margin accounts for 35%. There is a fall in price of share after two days and accounts for $35 per share.

To determine:

Whether the investor will receive the margin call

Introduction:

The margin in the trading account refers to the minimum amount of money, which the investor is required to maintain in his account in the form of margin for placing a trade order.

Summary Introduction

(B)

To calculate:

The price of the stock that enables the investor to get margin call

Introduction:

Margin call comes into picture when the investor is required to deposit additional securities or money so that the margin in the investor's account stands equivalent to the minimum margin requirement.

Expert Solution & Answer

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Answer 3

Question

Chapter 3, Problem 15PS

Summary Introduction

(A)

Adequate information

The investor borrowed $20,000 to purchase shares of Worley. The price at which the stock is currently prevailing accounts for $40. The initial requirement of margin is 50%. The maintenance margin accounts for 35%. There is a fall in price of share after two days and accounts for $35 per share.

To determine:

Whether the investor will receive the margin call

Introduction:

The margin in the trading account refers to the minimum amount of money, which the investor is required to maintain in his account in the form of margin for placing a trade order.

Summary Introduction

(B)

To calculate:

The price of the stock that enables the investor to get margin call

Introduction:

Margin call comes into picture when the investor is required to deposit additional securities or money so that the margin in the investor's account stands equivalent to the minimum margin requirement.

Expert Solution & Answer

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Answer 4

Question

Chapter 3, Problem 15PS

Summary Introduction

(A)

Adequate information

The investor borrowed $20,000 to purchase shares of Worley. The price at which the stock is currently prevailing accounts for $40. The initial requirement of margin is 50%. The maintenance margin accounts for 35%. There is a fall in price of share after two days and accounts for $35 per share.

To determine:

Whether the investor will receive the margin call

Introduction:

The margin in the trading account refers to the minimum amount of money, which the investor is required to maintain in his account in the form of margin for placing a trade order.

Summary Introduction

(B)

To calculate:

The price of the stock that enables the investor to get margin call

Introduction:

Margin call comes into picture when the investor is required to deposit additional securities or money so that the margin in the investor's account stands equivalent to the minimum margin requirement.

Expert Solution & Answer

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Answer 5

Chapter 3, Problem 15PS

Summary Introduction

(A)

Adequate information

The investor borrowed $20,000 to purchase shares of Worley. The price at which the stock is currently prevailing accounts for $40. The initial requirement of margin is 50%. The maintenance margin accounts for 35%. There is a fall in price of share after two days and accounts for $35 per share.

To determine:

Whether the investor will receive the margin call

Introduction:

The margin in the trading account refers to the minimum amount of money, which the investor is required to maintain in his account in the form of margin for placing a trade order.

Summary Introduction

(B)

To calculate:

The price of the stock that enables the investor to get margin call

Introduction:

Margin call comes into picture when the investor is required to deposit additional securities or money so that the margin in the investor's account stands equivalent to the minimum margin requirement.

Answer 6

Chapter 3, Problem 15PS

Summary Introduction

(A)

Adequate information

The investor borrowed $20,000 to purchase shares of Worley. The price at which the stock is currently prevailing accounts for $40. The initial requirement of margin is 50%. The maintenance margin accounts for 35%. There is a fall in price of share after two days and accounts for $35 per share.

To determine:

Whether the investor will receive the margin call

Introduction:

The margin in the trading account refers to the minimum amount of money, which the investor is required to maintain in his account in the form of margin for placing a trade order.

Answer 7

Chapter 3, Problem 15PS

Summary Introduction

(A)

Adequate information

The investor borrowed $20,000 to purchase shares of Worley. The price at which the stock is currently prevailing accounts for $40. The initial requirement of margin is 50%. The maintenance margin accounts for 35%. There is a fall in price of share after two days and accounts for $35 per share.

To determine:

Whether the investor will receive the margin call

Introduction:

The margin in the trading account refers to the minimum amount of money, which the investor is required to maintain in his account in the form of margin for placing a trade order.

Answer 8

Summary Introduction

(B)

To calculate:

The price of the stock that enables the investor to get margin call

Introduction:

Margin call comes into picture when the investor is required to deposit additional securities or money so that the margin in the investor's account stands equivalent to the minimum margin requirement.

Answer 9

Summary Introduction

(B)

To calculate:

The price of the stock that enables the investor to get margin call

Introduction:

Margin call comes into picture when the investor is required to deposit additional securities or money so that the margin in the investor's account stands equivalent to the minimum margin requirement.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 3 - Prob. 1PS Ch. 3 - Prob. 2PS Ch. 3 - Prob. 3PS Ch. 3 - Prob. 4PS Ch. 3 - Prob. 5PS Ch. 3 - Prob. 6PS Ch. 3 - Prob. 7PS Ch. 3 - Prob. 8PS Ch. 3 - Prob. 9PS Ch. 3 - Prob. 10PS

Solution Summary: The author explains that the investor borrows 20,000 to purchase shares of Worley. The initial requirement of margin is 50% and the maintenance margin accounts for 35%.

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