c. You purchased 100 shares of common stock on margin at $55 per share. Assume that theinitial margin is 60%, with the maintenance margin of 35%. If the price moves to $40per share, what would be the remaining equity margin in your account? Calculate theprice at which there will be a margin call?

Share trading in stock market is done on the basis of margins. Initial margin is amount of money…

Answered: You purchased 100 shares of common…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume that an investor buys 100 shares of stock at $37 per share, putting up a 65% margin. a. What is the debit balance in this transaction? b. How much equity funds must the investor provide to make this margin transaction? c. If the stock rises to $59 per share, what is the investor's new margin position? a. The debit balance in this transaction is $ *** (Round to the nearest dollar.)
Assume you purchased 200 shares of GE common stock on margin at $70 per share from your broker. If the initial margin is 55%, how much did you borrow from the broker? Assume you sold short 100 shares of common stock at $40 per share. The initial margin is 50%. What would be the maintenance margin if a margin call is made at a stock price of $50?
1. You purchase 100 shares for $50 a share ($5,000), and after a yearthe price rises to $60. What will be the percentage return on yourinvestment if you bought the stock on margin and the marginrequirement was? a.25 percent b.50 percent c.75 percent 2. Repeat Problem 1 to determine the percentage return on yourinvestment but in this case suppose the price of the stock falls to$40 per share. What generalization can be inferred from youranswers to Problems 1 and 2? 3. How many years will it take for 197000 dollars to grow to 554000 dollars if it is invested in an account with a quoted annual interest rate of 8 percent with monthly compounding interest?
Suppose that you just purchased 250 shares of Beta Banana's stock for $70 per share. The initial margin requirement is 70.0%, which means the amount borrowed is $5,250. The corresponding balance sheet is below: Liabilities and Equity Stock Total assets Margin percentage Assets Required: a. Now suppose the price of the stock falls to $41 per share. What is your current margin percentage? (Round your answer to 2 decimal places.) b. Construct the balance sheet to show the current situation. Stock Total assets $ 17,500.00 $ 17,500.00 c. If the maintenance margin is 50%, at what stock price would you get a margin call? (Round your answer to 2 decimal places.) Price Loan from broker. Equity Total liabilities and equity Assets % $ 5,250.00 $ 12,250.00 $ 17,500.00 Liabilities and Equity Loan from broker Equity Total liabilities and equity
Assume an initial margin requirement of 50% and a maintenance margin of 30%. An investor buys 100 shares of stock on margin at $60 per share. The price of the stock subsequently drops to $50. a. What is the actual margin at $50? b. If the price declines to $49, is there a margin call? c. Assume that the price declines to $45. What is the amount of the margin call? At $35?
Assume you purchase a share of stock for $50 at time t=0, and another share at $65 at time t= 1, and at the end of year 1 and year 2, the stock paid a $2.00 dividend. Also, at the end of year 2 you sold both shares for $70 each. What is the time-weighted rate of return? Give typing answer with explanation and conclusion
A stock sells for $15 per share. You purchase 100 shares for $15 a share (i.e., for $1,500), andafter a year the price rises to $18.75 a) What will be the percentage return on your investment ifyou bought the stock on margin and the margin requirement was 65 percent? (Ignore commissions, dividends, and interest expense.) b) Rather than selling for $18.75, determine the percentage return on your investment if the price of the stock falls to $12.30 Based on your answers to both questions, what generalization on the use of marginaccounts can be inferred?
You purchase 1,000 shares of WMT (Walmart) for $143 per share. A year later, you sell the stock for $166 per share. You receive a dividend of $2.27 a share. a.What is your total dollar return? b. What are your dividend yield, capital gain yield, and total percentage return? Note: don't use chat gpt.
Assume you buy 200 shares of stock at $70 per share on margin (40 percent). a. If the price risesto $95 per share, what is your percentage gain on the initial equity? b. What would the percentageloss on the initial equity be if the price had decreased to $40 ?
You've borrowed $27,392 on margin to buy shares in bxnay, which is now selling at $42.8 per share. You invest 1280 shares. Your account starts at the initial margin requirement of 50% The maintenance margin is 35%. Two days later, the stock price changes to $49 per share. a. Will you receive a margin call? O Yes ONo b. At what price will you receive a margin cal? (Round your answer to 2 decimel pleces.)
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?
You have borrowed $45,000 on margin to buy shares in Tencent, which is now selling at $120 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 $105 per share. a. What is the current margin and will you recieve a margin call? b. How low can the price of the shares fall before you recieve a margin call?

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You purchased 100 shares of common stock on margin at $55 per share. Assume that the nitial margin is 60%, with the maintenance margin of 35%. If the price moves to $40 mer share, what would be the remaining equity margin in your account? Calculate the rice at which there will be a margin call?