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 new account equity? C. How much money you need to give the broker to meet the maintenance margin?

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 new account equity? C. How much money you need to give the broker to meet the maintenance margin?

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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Similar questions

You purchase a share of Zumunta Plc for GH¢50 per share today. If the share pays dividend of GH¢2.5 next year and sells for GH¢55, what will be the dividend yield , capital gain and the total returns?
You purchase 100 shares of stock for $40 a share. The stock pays a $2 per share dividend at year-end. What is the rate of return on your investment if the year-end stock prices turn out to be $38, $40, and $42? What is your real (inflation-adjusted) rate of return in each case, assuming an inflation rate of 3%? Show all of your working. Do no use Excel.
Please do stepwise and correct please ill like. Dée Trader opens a brokerage account and purchases 200 shares of Internet Dreams at $46 per share. She borrows $2,400 from her broker to help pay for the purchase. The interest rate on the loan is 8%. a. What is the margin in Dée’s account when she first purchases the stock? b. If the share price falls to $36 per share by the end of the year, what is the remaining margin in her account? (Round your answer to 2 decimal places.)..
Suppose you have just inherited $10,400 and are considering the following options for investing the moneyto maximize your return:Option 1: Put the money in an interest-bearing checking account that earns 3%. The FDIC insures the accountagainst bank failure.Option 2: Invest the money in a corporate bond with astated return of 6%, although there is a 10% chance thecompany could go bankrupt.Option 3: Loan the money to one of your friend’sroommates, Ayesha, at an agreed-upon interest rate of7%, but you believe there is a 7% chance that she willleave town without repaying you.Option 4: Hold the money in cash and earn zero return.a. If you are risk-neutral (that is, neither seekout nor shy away from risk), which of the fouroptions should you choose to maximize yourexpected return? (Hint: To calculate the expectedreturn of an outcome, multiply the probabilitythat an event will occur by the outcome of thatevent and then add them up.)b. Assume that Option 3 and Option 4 are your onlychoices. If…
6. Assume you own Apple stock. The current price is $100. Assume a strike of $110 and expiration of 3 months. The premium is $4 for a call. Assume you use a covered call. What is the maximum profit you can make? Now assume you use a protective put with a premium of $6 and strike of $108 and the price falls to $90. What is the profit/loss?
Please help me to solve this question
b) Your broker has advised you to buy shares of Fast repair computer repair shop, which has paid a dividend of $2 per share annually and will (according to the broker) continue to do so for many years. The stock is currently priced at $18. You have good reason to think that the appropriate rate of return for this stock is 13% per year. Is the stock's present price a good approximation for the true financial value? What would you like to pay for the share and should you buy or sell now?
You expect a share of EconNews.Com to sell for $69 a year from now. If you are willing to pay $70.09 for one share of the stock today, and you require a return of 7 percent, what dividend payment must you expect to receive from the stock?
What would you pay for a stock, which just paid a $4.17 dividend (d0), if the expected dividend growth rate is 4% and you require a 9.5% return on your investment?
What would be the return on your investment as a percentage to 6 decimal places if you buy a $5,000 T-bill that matures in 91 days for $4,999.55? % What would be the estimation of your earnings as an investor as a percentage to 6 decimal places if you use the discount rate instead of the investment rate to measure the return on your investment. % What would be the underestimation of your earnings as an investor as a percentage to 6 decimal places if you use the discount rate instead of the investment rate to measure the return on your investment? %
A trader buys a European call for $1. The strike price is $30. Draw a diagram that shows the trader’s variation in profit as a function of the stock price at expiration.
You are bullish on XYZ stock. The current market price is $100 per share, and you have $10,000 of your own to invest. You borrow an additional $10,000 from your broker at an interest rate of 8% per year and invest $20,000 in the stock. WHAT IS THE margin call if the maintenance margin is 30%? Assume the price IS $115 one year LATER.

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