Sarah bought stock on margin 8 months ago borrowing $10,000 at 7% EAR. She has just received a margin call for $3000 and her maintenance and initial margin was 15%. What must be the current value of the assets, BEFORE THE CALL, in her margin account? [Choose closest] a) Cannot be determined with the information provided, we need the number of shares b) Cannot be determined with the information provided, we need to know the original asset value c) $0 d) $9,310.51 e) $12,310.51 The answer is d) but why?
Sarah bought stock on margin 8 months ago borrowing $10,000 at 7% EAR. She has just received a margin call for $3000 and her maintenance and initial margin was 15%. What must be the current value of the assets, BEFORE THE CALL, in her margin account? [Choose closest] a) Cannot be determined with the information provided, we need the number of shares b) Cannot be determined with the information provided, we need to know the original asset value c) $0 d) $9,310.51 e) $12,310.51 The answer is d) but why?
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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Y8
Sarah bought stock on margin 8 months ago borrowing $10,000 at 7% EAR. She has just received a margin call for $3000 and her maintenance and initial margin was 15%. What must be the current value of the assets, BEFORE THE CALL, in her margin account? [Choose closest]
a) Cannot be determined with the information provided, we need the number of shares
b) Cannot be determined with the information provided, we need to know the original asset value
c) $0
d) $9,310.51
e) $12,310.51
The answer is d) but why?
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