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D?e Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $40 per share.

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D?e Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $40 per share. She borrows $4,000 from her broker to help pay for the purchase. The interest rate on the loan is 8%.;a. What is the margin in D?e's account when she first purchases the stock?;b. If the share price falls to $30 per share by the end of the year, what is the remaining margin in her account? If the maintenance margin requirement is 30%, will she receive a margin call?;c. What is the rate of return on her investment?;(BODIE, Zvi. Investments, 8th Edition. Irwin/McGraw-Hill, 062008. 11.9.3).

 

Paper#31779 | Written in 18-Jul-2015

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