Lauren has a margin account and deposits $49,994 into it. Assume the prevailing margin requirement is 40%, interest and commisions are ignored, and the Gentry Wine Corporation is selling at $35 per share. a) How many shares can Lauren purchase using the maximum allowable margin? b) What is Lauren's profit (loss) if the price of Gentry's stock 1) rises to $45 and Lauren sells the stock? 2) falls to $25 and Lauren sells the stock? c) If the maintenance margin is 30% to what price can Gentry Wine fall before Lauren will receive a margin call?

Lauren has a margin account and deposits $49,994 into it. Assume the prevailing margin requirement is 40%, interest and commisions are ignored, and the Gentry Wine Corporation is selling at $35 per share. a) How many shares can Lauren purchase using the maximum allowable margin? b) What is Lauren's profit (loss) if the price of Gentry's stock 1) rises to $45 and Lauren sells the stock? 2) falls to $25 and Lauren sells the stock? c) If the maintenance margin is 30% to what price can Gentry Wine fall before Lauren will receive a margin call?

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter16: Property Transactions: Capital Gains And Losses

Section: Chapter Questions

Problem 24P

See similar textbooks

Similar questions

After researching Best Buy common stock, Sally Wang is convinced the stock is overpriced. She contacts her account executive and arranges to sell short 400 shares of Best Buy. At the time of the sale, a share of common stock had a value of $160. Three months later, Best Buy is selling for $152 a share, and Sally instructs her broker to cover her short transaction. Total commissions to buy and sell the stock were $64. What is her profit for this short transaction?
After researching Best Buy common stock, Sally Wang is convinced the stock is overpriced. She contacts her account executive and arranges to sell short 200 shares of Best Buy. At the time of the sale, a share of common stock had a value of $140. Three months later, Best Buy is selling for $132 a share, and Sally Instructs her broker to cover her short transaction. Total commissions to buy and sell the stock were $54. What is her profit for this short transaction? Total profit after commissions?
Lauren has a margin account and deposits R50,000. Assume the prevailing margin requirement is 40 percent, commissions are ignored, and the Gentry Wine Corporation is selling at R35 per share. a. How many shares can Lauren purchase using the maximum allowable margin? b. What is Lauren’s profit (loss) if the price of Gentry’s stock i. rises to R45? ii. falls to R25? c. If the maintenance margin is 30 percent, to what price can Gentry Wine fall before Lauren will receive a margin call? Ko
Lauren has a margin account and deposits R50,000. Assume the prevailing margin requirement is 40 percent, commissions are ignored, and the Gentry Wine Corporation is selling at R35 per share. a. How many shares can Lauren purchase using the maximum allowable margin? b. What is Lauren’s profit (loss) if the price of Gentry’s stock i. rises to R45? ii. falls to R25? c. If the maintenance margin is 30 percent, to what price can Gentry Wine fall before Lauren will receive a margin call?
Lauren has a margin account and deposits R50,000. Assume the prevailing margin requirement is 40 percent, commissions are ignored, and the Gentry Wine Corporation is selling at R35 per share. a. What is Lauren’s profit (loss) if the price of Gentry’s stock i. rises to R45? ii. falls to R25?
Suppose that Tesla stock is currently selling at $270 per share. For each of the following situations (ignoring brokerage commissions), calculate the gain or loss that Olivia Crowe realizes if she makes a 100-share transaction. She sells short and repurchases the borrowed shares at $295 per share. She takes a long position and sells the stock at $295 per share. She sells short and repurchases the borrowed shares at $255 per share. She takes a long position and sells the stock at $255 per share.
On March 1st, Frank opens a brokerage account and sell shorts 200 shares of Doggie Treats Inc. at $60 per share. The initial margin requirement is 50%. a. What is the margin in Frank’s account when he first sells the stock? b. The stock pays a cash dividend of $1 on March 28th, and the share price falls to $50 per share by the end of March, what is the remaining equity in his account? c. What is the monthly rate of return on his margined position?
Given that Local Care, Inc.'s stock is currently selling for $65 a share, calculate the amount of money that Elijah Pearson will make (or lose) on each of the following transactions. Assume that all transactions involve 100 shares of stock, and ignore brokerage commissions. Input all answers as positive values. He short-sells the stock and then repurchases the borrowed shares at $85.Total of $ . He buys the stock and then sells it some time later at $85.Total of $ . He short-sells the stock and then repurchases the borrowed shares at $50.Total of $ .
Suppose Formura’s stock is currently trading at $50 per share, but Lorenzo believes that the stock is overpriced. In response to this, he calls his broker to take a short position on 300 shares of Formura’s stock. Over the next three months, the price of Formura’s stock decreased, and Lorenzo placed an order to purchase 300 shares to offset his short position. If the price decreased to $45, then Lorenzo stands to earn $______ from his short position. -$3,000 $3,000 -$1,500 $1,500
In March of this year, Ermine felt the market had nowhere to go but down. Accordingly, she sold short $15,000 of IGM stock. Her broker requires a 60% margin on short sales. Ermine covered her short position when the value of her shorted IGM shares fell to $13,000. During the time Ermine’s short position was open, IGM paid a dividend of $500. What percentage return did Ermine earn on her initial investment?
Michele bought 850 shares of APPLE at the 52 week low and sold the shares at the 52 week high shown in the table. A) ignoring dividends, what was michele's profit or loss on the sale of the stock? Was this a loss or profit? B) If her broker charges 1.9% of the total sale price, what was the broker's commission?
Lauren short sells 100 shares of XYZ at $52 with a 50% initial margin. She then bays back the stock for $48. If her broker charges 2% of the borrowed amount, what is her percentage profit or loss?