Homework Answers
Long position: buying the share, with the expectation that share
price will rise.
Short position: selling the share, with the expectation that share
price will fall.
Account equity= amount of money deposited in the form of margin+ gain in the margin.
Sale proceeds= amount we get by selling the share in the short position.
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3. Define Short Sales. Make sure you explain what a long position and a short position...
Margin Ratios: Long: Your starting position is as follows: Assets:  
Margin Ratios: Long: Your starting position is as follows: Assets: Liabilities & Equity 1,000 shrs @ $10 Loan from Broker $4,000 = $10,000 Equity $6,000 What is your starting “percentage margin”? You believe the stock is going to go up to $15 per share. If it does that, what would be your: Dollar return on the $6,000 equity you started out with? The percentage return on the $6,000 equity you started with? Bad news – you...
Do not use excel please, show work Short Position Name: Date: Suppose that an investor sells...
Do not use excel please, show work
Short Position Name: Date: Suppose that an investor sells 400 shares short at S50 per share. The initial margin is 50% and the maintenance margin is 30%. After 125 days, the investor purchases the shares for S40 and closes the short position. During the holding period, the shares paid a dividend of $2.50 per share. Show the calculations for the numbers that you enter in the "T" accounts a. Show the investor's beginning...
You believe the price of Freeze Frame Co. stock is going to fall, so you short...
You believe the price of Freeze Frame Co. stock is going to
fall, so you short 1,050 shares at a price of $82. The initial
margin is 60 percent. Ignore dividends.
a. Construct the equity balance sheet for the
original trade. (Input all amounts as positive
values.)
b-1. Construct an equity balance sheet for a
stock price of $73 per share. (Input all amounts as
positive values.)
b-2. What is your margin? (Do not round
intermediate calculations. Enter your answer...
19. You want to purchase 50 shares of IBM stock at $80 from your broker. The...
19. You want to purchase 50 shares of IBM stock at $80 from your broker. The initial margin is 50%. a. Construct your balance sheet when vou open the position at P = $80. (6 points) b.Suppose the stock price falls to $50, construct the balance sheet at that price. (6 points) Liabilities and Equity Assets C. Calculate the percentage margin at P = $50. If the maintenance margin is 30%, will you receive a margin call? (6 points) d.Suppose...
need help with questions 3,4,5,6 please You have purchased 500 shares of MSFT (Microsoft) at $100...
need help with questions 3,4,5,6 please
You have purchased 500 shares of MSFT (Microsoft) at $100 per share using the maximum percentage of borrowed (marained) funds per FRB Regulation T. The maintenance margin can Tevel on your brokerage account is 25%. When will you receive a margin call on your account 2. Relative to question 1. If the maintenance margin call level on your account was 35% rather than 25%, what would your new margin call level be? 3. Relative...
IN CLASS ASSIGNMENT Suppose You short sell 500 shares of ABC stock at $25/share Initial margin...
IN CLASS ASSIGNMENT Suppose You short sell 500 shares of ABC stock at $25/share Initial margin requirement is 50% and maintenance margin requirement is 40% A year later, stock price increases to $30/share QI. Initially, how much did you supply and how much did you borrow? Create an initial Balance sheet for short sale margin account. Q2. After a year later, what is your new margin? Did you get a margin call? Create a new B/S for this question Q3....
5. Margin Calls (LO3, CFA4) You buy 500 shares of stock at a price of $38...
5. Margin Calls (LO3, CFA4) You buy 500 shares of stock at a price of $38 and an initial margin of 60 percent. If the maintenance margin is 30 percent, at what price will you receive a margin call? 6. Margin Calls on Short Sales (L04, CFA5) You short sold 1,000 shares of stock at a price of S36 and an initial margin of 55 percent. If the maintenance margin is 35 percent, at what share price will you receive...
You are bearish on a technology stock and decide to sell short 100 shares at the...
You are bearish on a technology stock and decide to sell short 100 shares at the current market price of $36.00 per share. a.) How much in cash or securities must you put into your brokerage account if the broker’s initial margin requirement is 50% of the value of the short position b.) How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short...
1. You are bearish on Telecom stock and decide to sell short 100 shares at the...
1. You are bearish on Telecom stock and decide to sell short 100 shares at the current market price of $50 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short...
Help Save & You are bearish on Telecom and decide to sell short 100 shares at...
Help Save & You are bearish on Telecom and decide to sell short 100 shares at the current market price of $33 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? Initial margin b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value...
Do not use excel please, show work
Short Position Name: Date: Suppose that an investor sells 400 shares short at S50 per share. The initial margin is 50% and the maintenance margin is 30%. After 125 days, the investor purchases the shares for S40 and closes the short position. During the holding period, the shares paid a dividend of $2.50 per share. Show the calculations for the numbers that you enter in the "T" accounts a. Show the investor's beginning...
You believe the price of Freeze Frame Co. stock is going to
fall, so you short 1,050 shares at a price of $82. The initial
margin is 60 percent. Ignore dividends.
a. Construct the equity balance sheet for the
original trade. (Input all amounts as positive
values.)
b-1. Construct an equity balance sheet for a
stock price of $73 per share. (Input all amounts as
positive values.)
b-2. What is your margin? (Do not round
intermediate calculations. Enter your answer...
19. You want to purchase 50 shares of IBM stock at $80 from your broker. The initial margin is 50%. a. Construct your balance sheet when vou open the position at P = $80. (6 points) b.Suppose the stock price falls to $50, construct the balance sheet at that price. (6 points) Liabilities and Equity Assets C. Calculate the percentage margin at P = $50. If the maintenance margin is 30%, will you receive a margin call? (6 points) d.Suppose...
need help with questions 3,4,5,6 please
You have purchased 500 shares of MSFT (Microsoft) at $100 per share using the maximum percentage of borrowed (marained) funds per FRB Regulation T. The maintenance margin can Tevel on your brokerage account is 25%. When will you receive a margin call on your account 2. Relative to question 1. If the maintenance margin call level on your account was 35% rather than 25%, what would your new margin call level be? 3. Relative...
IN CLASS ASSIGNMENT Suppose You short sell 500 shares of ABC stock at $25/share Initial margin requirement is 50% and maintenance margin requirement is 40% A year later, stock price increases to $30/share QI. Initially, how much did you supply and how much did you borrow? Create an initial Balance sheet for short sale margin account. Q2. After a year later, what is your new margin? Did you get a margin call? Create a new B/S for this question Q3....
5. Margin Calls (LO3, CFA4) You buy 500 shares of stock at a price of $38 and an initial margin of 60 percent. If the maintenance margin is 30 percent, at what price will you receive a margin call? 6. Margin Calls on Short Sales (L04, CFA5) You short sold 1,000 shares of stock at a price of S36 and an initial margin of 55 percent. If the maintenance margin is 35 percent, at what share price will you receive...
1. You are bearish on Telecom stock and decide to sell short 100 shares at the current market price of $50 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short...
Help Save & You are bearish on Telecom and decide to sell short 100 shares at the current market price of $33 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? Initial margin b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value...
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