A.
=>If we would have purchased the stocks WITHOUT using margin then:
Cost= 1000 stocks * 48.18 which is $48180
Sale value= 1000 stocks * 46.85 which is $46850
We get a loss of $1330 that is 2.7% negative return.,
=>If we purchase the stocks on margin.
The investment would have been 48180 * 30% = $14454
The loss remains the same because there is no interest or charges on margin. The calculation of return will go like 1330/14454 = 9.2%
In case of a loss, loss is more in a margin case because it is a borrowed money. In this particular question we don't have any interest charges that is why the loss remains the same.
October 10, 2019 closing price= 47.76 closing price October 31, 2019 is 46.85 september 10, 2019...
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Part (1) Option Quotations for
the M&B Corporation are listed as follows:
.............................................CALL.............PUT
Closing.....Strike....EXP...Premium.....Premium
50.3............52.0......Jul........0.250...........2.10
50.3............52.0......Sep......0.400...........2.25
50.3............57.0......Aug......0.500.........7.40
50.3............62.0......Oct.......0.700.........12.6
50.3............67.0......Jun.....1.00............17.8 Closing
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Paid-in Capital in Excess of Par—Common Stock 400,000
Common Stock Dividends Distributable 250,000
Retained Earnings 1,042,000
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1. No errors have been made in recording 2020 transactions or in
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