You buy 300 shares of Suncor Energy for $25 per share and deposit initial margin of 50%. The next day, Suncor Energy 's price drops to $20 per share. What is your actual margin the next day? Multiple Choice 25% 40% 50% 62.5% 60%
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You buy 300 shares of Suncor Energy for $25 per share and deposit initial margin of 50%. The next day, Suncor Energy 's price drops to $20 per share. What is your actual margin the next day?
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25%
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40%
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50%
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62.5%
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60%
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Solved in 3 steps
- The price of Outdoor Designs, Inc. is now 85. The company pays no dividends. Fred Gray expects the price four years from now to be 125 a share. Should Fred buy Outdoor Designs if he wants a 15 percent rate of return? Explain.You purchase 100 shares of COST (Costco) for $280 per share. Three months later, you sell the stock for $290 per share. You receive a dividend of $0.57 a share. What is your total dollar return?You purchase 110 shares for $40 a share ($4,400), and after a year the price falls to $35. Calculate the percentage return on your investment if you bought the stock on margin and the margin requirement was (ignore commissions, dividends, and interest expense): 15 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. % 50 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. % 75 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. %
- You purchase 150 shares for $70 a share ($10,500), and after a year the price rises to $80. Calculate the percentage return on your investment if you bought the stock on margin and the margin requirement was (ignore commissions, dividends, and interest expense): 15 percent. Round your answer to one decimal place. 65 percent. Round your answer to one decimal place. 85 percent. Round your answer to one decimal place.You purchase 70 shares of Pepsi on margin at $50 per share. Assume the initial margin is 50%. The annual interest rate is 8%. If after one year, the shares increase to $52 and you sell your position, what is your return? 4% 8% 2% 0%You purchase 100 shares of COST for $280 per share. Three months later, you sell the stock for $290 per share. You receive a dividend of $0.57 a share. What is the EAR of your investment?
- An investor buys 100 shares of Altria at $82 per share on margin. The initial margin requirement is 50 percent, and the maintenance margin is 30 percent.a. The price of Altria drops to $61 per share. What is the actual margin now?b. The price of Altria declines further to $59.50. Show why a margin call is generated, or is not warranted.c. The price declines yet again to $55.25. Show by calculations why a margin call is generated.d. Using the information in (3), how much cash must be added to the account to bring it into compliance with the margin requirements?You’ve borrowed $22,000 on margin to buy shares in Ixnay, which is now selling at $32 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 $22 per share. a. Will you receive a margin call? multiple choice No Yes b. How low can the price of Ixnay shares fall before you receive a margin call? (Round your answer to 2 decimal places.) Margin call will be made as price _______ or lower.You’ve borrowed $20,000 on margin to buy shares in Ixnay, which is now selling at $40 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $35 per share.a. Will you receive a margin call?b. How low can the price of Ixnay shares fall before you receive a margin call?
- Joe wants to buy 120 shares of Company X at S50 per share using a margin account. The brokers initial margin requirement is 45%. Calculate the amount of money Joe must initially invest. (Note: Input your answer in XX format, e.g., 1000; round it to the nearest integer if an exact decimal answer is not available.)You purchase 200 shares for $50 a share, and after a year the price rises to $70. What is yourpercentage return if you bought the stock on the following margin:a. 50% (ignore commissions, dividends, and interest expense) b. 30% (ignore commissions, dividends, and interest expense) c. 20% (and the borrowing cost was 10% of initial purchase).You short sell 1,000 shares of RAJ stock at a price of $70. Your initial margin is 50%. If you cover your RAJ short position at a price of $65, how much is your return? A. 14.29% B. 12.31% C. 17.39% D. 15.65%