Dée Trader opens a brokerage account, and purchases 320 shares of Internet Dream
ID: 2729458 • Letter: D
Question
Dée Trader opens a brokerage account, and purchases 320 shares of Internet Dreams at $30 per share. She borrows $3,590 from her broker to help pay for the purchase (Ignore transaction costs). The interest rate on the loan is 13%.
What is the margin in Dée's account when she first purchases the stock?
If the share price falls to $20 per share by the end of the year, what is the remaining margin in her account?
If the maintenance margin requirement is 37%, will she receive a margin call?
What is the rate of return on her investment?
Requirement 1:What is the margin in Dée's account when she first purchases the stock?
If the share price falls to $20 per share by the end of the year, what is the remaining margin in her account?
(b)If the maintenance margin requirement is 37%, will she receive a margin call?
Requirement 3:What is the rate of return on her investment?
Explanation / Answer
Requirement 1
1.margin in Dée's account when she first purchases the stock = $ 6010 ( 9600-3590)
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