8) Jerri Kingston bought 100 shares of stock at $100 per share using an initial margin...

Question

Question

Answer 1

Answer #1

Price per share = $100

Margin requirement = 70%

Hence, Amount borrowed per share = Price per share * (1 - Margin Requirement) = 100(1-0.30) = $30

Maintenance Margin = 50%

Maximum allowable percentage of borrowed funds = 1 - Maintenance Margin = 1 - 0.50 = 0.50

Maintenance Margin = Amount borrowed per share / maximum allowable percentage of borrowed funds = 30/0.50 = $60

Hence, Jerri faces a margin call if the stock price drops to $60

Answer 2

Similar Homework Help Questions

Jerri Kingston bought 100 shares o stock at S86 84 per share, using an nit a...

Jerri Kingston bought 100 shares o stock at S86 84 per share, using an nit a margin o 53%. Glven a ma tenance margin o 32%, how ar does he stock have o drop be re Jer aces a margin cal ? Assume that there are no other securit es n the margin account. Before Jerri faces a margin call, the stack has to drop to Sper share (Raund to the nearest cent
HW SCUFU 1870, 90 20 P2.16 (similar to) Question Help An investor short sells 300 shares...

HW SCUFU 1870, 90 20 P2.16 (similar to) Question Help An investor short sells 300 shares of a stock for $21 per share. The initial margin is 52%. How much equity will be initially required in the account to complete this words, what is the initial margin deposit? action in other The initial margin deposit is $ (Round to the nearest dollar) P2.12 (similar to) Question Help Jerri Kingston bought 100 shares of stock at $86.03 per share using an...
7. If the maintenance margin is 30%, you bought 100 shares of IBM for $100 per...

7. If the maintenance margin is 30%, you bought 100 shares of IBM for $100 per share with initial margin 50%, to what price can IBM stock price fall before you will receive a margin call? A. $90.21 B. $78.79 C. $71.43 D. $87.12

2) You sell short 100 shares of ABC stock at $40 per share. The initial margin...

2) You sell short 100 shares of ABC stock at $40 per share. The initial margin is 50% and the maintenance margin is 40% How much do you post at the margin account as your initial margin per share? (20points) II) At what price will you get a margin call? (30points)
Assume you sold short 100 shares of common stock at $70 per share. The initial margin is 50%. what would be the maintena...

Assume you sold short 100 shares of common stock at $70 per share. The initial margin is 50%. what would be the maintenance margin if a margin call is made at a price of $85? a.40.5% b.20.5% c.35.5% d.23.5%
You purchased 100 shares of IBM common stock on margin at $70 per share. Assume the initial margin is 50% and the m...

You purchased 100 shares of IBM common stock on margin at $70 per share. Assume the initial margin is 50% and the maintenance margin is 30%. 1) Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin. (15 pts) 2) Suppose that, unfortunately, the stock price drops to $48. You decide to put some additional cash to restore the margin. How much cash you need to inject to restore...

You purchased 50 shares of PPI common stock on margin at $100 per share. Assume the...

You purchased 50 shares of PPI common stock on margin at $100 per share. Assume the initial margin is 60% and the maintenance margin is 30%. Below what stock price level by the year end would you get a margin call? The call loan rate is 2% per year. O a) $49.67 Ob) $58.29 O c) $44.97 O d) $52.86
You sold short 1,000 shares of a stock at $46 per share. The initial margin is...

You sold short 1,000 shares of a stock at $46 per share. The initial margin is 50%. a) At what stock price would you receive a margin call if the maintenance margin is 35%? (do not consider dividends in question a) b) Assume that the stock paid a $0.25 dividend per share each quarter, what is the rate of return if you buy to cover the shares at $40 per share at the end of the quarter?
You purchased 100 shares of Facebook, Inc. common stock on margin at $169.25 per share. Assume...

You purchased 100 shares of Facebook, Inc. common stock on margin at $169.25 per share. Assume the initial margin is 50% and the maintenance margin is 30%. One year later, the stock price closes at $172.58. If the broker’s call loan rate is 2.00%, what is your return on equity? Note that Facebook pays no dividends.

An investor short sells 200 shares of a stock for $20.31 per share. The initial margin...

An investor short sells 200 shares of a stock for $20.31 per share. The initial margin is 51%, and the maintenance margin is 26%. The price of the stock rises to $28.68 per share. Wha is the margin, and will there be a margin call? The margin in the account is 1%. Round to the nearest percent.)