You have 3000 dollars to invest and you buy as many calls as you can on a stock called BOON, if calls on BOON cost $3.20 with a strike of 32 and the stock costs $30 At what stock price do you break even on an investment of the $3000 in calls?
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You have 3000 dollars to invest and you buy as many calls as you can on a stock called BOON, if calls on BOON cost $3.20 with a strike of 32 and the stock costs $30
At what stock price do you break even on an investment of the $3000 in calls?
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- You are about to purchase OSTK, which is currently trading at $20 per share. You have $5,000 of your own to invest. You borrow an additional $5,000 from your broker and invest $10,000 in the stock. How far does the stock price have to fall for you to get a margin call if the maintenance margin requirement is 35%?Suppose you have $39,000 you would like to invest in two different stocks, Stock Boll and Stock Coff. The buying limit on Stock Coff is $12,300 and you want to spend at least two times as much money on Stock Boll as Stock Coff. If Stock Boll earns 7% annual interest and Stock Coff earns 4% annual interest, how much money (in dollars) should you invest in each stock to maximize your annual interest earned? What is the maximum annual interest (in dollars)?You want to purchase IBM stock at $130 from your broker using as little of your own money as possible. If initial margin is 50% and you have $19, 600to invest, how many shares can you buy?
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- Which of the following would offer the best return on investment? Assume that you buy $5,000 in stock in all three cases, and ignore interest and transaction costs in all your calculations. Also assume that decimal number of stocks can be bought so all the amount discussed is invested into the stocks in all three cases. Buy a stock at $90 without margin, and sell it a year later at $105. Buy a stock at $70 with 50% margin (50% loan), and sell it a year later at $85. Buy a stock at $65 with 25% margin (75% loan), and sell it a year later at $80. Alternative offers the best return on the investment.You decided to invest $10,000 of your savings in a stock whose current price is $25 per share. To utilize the benefit of margin investing, you borrowed an additional $10,000 from your broker and invested $20,000 in the stock, If the maintenance margin is 30 pereent, at what price will you receive your first margin call?You have R40,000 to invest in Sophie Shoes, a stock selling for R80 a share. The initial margin requirement is 60 percent. Ignoring taxes and commissions, show in detail the impact on your rate of return if the stock rises to R100 a share and if it declines to R40 a share assuming: (a) you pay cash for the stock, and (b) you buy it using maximum leverage. 2. 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? 3. Suppose you buy a round lot of Francesca Industries stock on 55 percent margin when the stock is selling at R20 a share. The broker charges a 10…
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