Sara Sanders purchased 50 shares of Apple stock at $190.28 per share using the prevailing minimum initial marginrequirement of 56%. She held the stock for exactly 4 months and sold it without any brokerage costs at the end of that period.During the 4-month holding period, the stock paid $1.41 per share in cash dividends. Sara was charged 5.5% annual intereston the margin loan. The minimum maintenance margin was 25%.a. Calculate the initial value of the transaction, the debit balance, and the equity position on Sara's transaction.b. For each of the following share prices, calculate the actual margin percentage, and indicate whether Sara's margin accountwould have excess equity, would be restricted, or would be subject to a margin call:(1) $174.44, (2) $207.39, and (3) $122.81.c. Calculate the dollar amount of (1) dividends received and (2) interest paid on the margin loan during the 4-month holdingperiod.d. Use each of the following sale prices at the end of the 4-month holding period to calculate Sara's annualized rate of returnon the Apple stock transaction:(1) $185.49, (2) $194.88, and (3) $205.63.a. The initial value of the transaction is $(Round to the nearest cent.)

Equity or ordinary shares are legal contracts granting shareholders ownership rights in the…

Answered: Sara Sanders purchased 50 shares of…

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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A) Sam bought 3000 units of shares from Company A at a price of RM2.00 per unit. The company pays a 5% dividend to shareholders at the end of the year. Sam sold all the shares and made a profit of RMO.50 per share. Calculate the total return on investment.
An investor bought 100 shares of a manufacturing company at $102 per share, with an initial margin of 60%. The investor was charged 9% margin interest annually. One year later, the investor sold the stock for $140 per share. The investor's holding period return is closest to:(a)54 % . (b)56 % . (c)123%. (d)223 %.
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Jessie B. purchases 450 shares of Smooth Sail Inc. for $50 per share at a time when the initial margin requirement is 60%. After two months, seeing that the price of Smooth Sail has fallen to $40 per share, Jessie wishes to buy an additional 200 shares. By this time, the initial margin requirement has gonedown to 50%. Will Jessie be able to do some pyramiding? What is the amount of margin he will be required to provide for his second transaction? Answer the question showing calculations.
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Amelia purchased 500 shares of Xienna stock at RM50 per share. She owns RM15,000 to invest and the minimum initial margin requirement is 50%. She held the stock for exactly four months and sold it without any brokerage cost at the end of that period. During the four-month holding period, the stock paid RM1.50 per share in cash dividends. Amelia was charged 8% annual interest on the margin loan. The minimum maintenance margin was 30%. While her husband, Afiq prefer to trade in stock futures. Afiq are bearish on Sunway stock and decide to short sells 300 shares. The initial margin is 50%, and the maintenance margin is 35%. A year later, Sunway price has risen from RM25 to RM37, and the stock has paid a dividend of RM2.00 per share. Required: a. Calculate the initial value of Amelia investment and borrowing amounts. b. What is the percentage margin when she first purchases the stock? c. Calculate the (1) dividend received and (2) interest paid on the margin loan during the four-month…
A broker starts a business on January 1 with $ 1,00,000 cash and no other assets and liabilities. He buys shares on January 1 for $ 1,00,000 and sells half of the shares for $ 88,000 on June 30. During the year, general price level has increased by 12.35% (7% in the first 6 months and 5% in the last 6 months of the year). The current cost of shares which were bought on January 1 for $ 50,000 was $ 73,500 on June 30, and $ 84,000 on December 31. From the above information, you are required to prepare the financial statements under alternative accounting methods, viz., historical cost accounts, purchasing power-adjusted accounts, current cost accounts and specific and general price-adjusted accounts.
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Derek purchased 845 shares of Texas Instruments Incorporated (TXN) for $172,540 in a margin account and posted initial margin of 45%. His broker, Justin, stated the maintenance margin requirement is 25%. The price of TXN, below which Derek would get a margin call, is closest to A. $100 B. $150 C. $200 D. $250

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