12 If an individual buys stock on margin and its price rises, a. the investor must...
12 If an individual buys stock on margin and its price rises,
|
a. |
the investor must put up additional collateral. |
|
|
b. |
the investor must pay interest on the borrowed funds. |
|
|
c. |
the investor must pay tax on the unrealized gain. |
|
|
d. |
the investor may take delivery of the stock. |
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12 If an individual buys stock on margin and its price
rises,
a.
the investor must...
Assume that an investor buys 100 shares of stock at $35 per share, putting up a...
Assume that an investor buys 100 shares of stock at $35 per share, putting up a 73% margin. a. What is the debit balance in this transaction? b. How much equity funds must the investor provide to make this margin transaction? c. If the stock rises to $54 per share, what is the investor's new margin position? a. The debit balance in this transaction is s (Round to the nearest dollar.) b. The amount of equity funds the investor must...
(3) An investor buys $8,000 worth of a stock priced at $40 per share using 50%...
(3) An investor buys $8,000 worth of a stock priced at $40 per share using 50% initial margin. The broker charges 6% on the margin loan and requires a 30% maintenance margin. In one year the investor has interest payable and gets a margin call. What is the stock price that triggers the margin call? How much additional cash should the investor put in his account to restore the 50% initial margin after receiving the margin call? Suppose that the...
A stock price is $25. An investor buys one put option contract on the stock with...
A stock price is $25. An investor buys one put option contract on the stock with a strike price of $24 and sells a put option contract on the stock with a strike price of $22.50. The market prices of the options are $2.12 and$1.95, respectively. The options have the same maturity date. Describe the investor's position and the possible gain/loss he will get (taking into account the initial investment).
Lisa Lasher buys 400 shares of stock on margin at $30 per share. If the margin...
Lisa Lasher buys 400 shares of stock on margin at $30 per share. If the margin requirement is 40 percent, how much must the stock rise for her to realize a 15-percent return on her invested funds? (Ignore dividends, commissions, and interest on borrowed funds.) Round your answer to the nearest cent. $
Lisa Lasher buys 410 shares of stock on margin at $20 per share. If the margin...
Lisa Lasher buys 410 shares of stock on margin at $20 per share. If the margin requirement is 40 percent, how much must the stock rise for her to realize a 40-percent return on her invested funds? (Ignore dividends, commissions, and interest on borrowed funds.) Round your answer to the nearest cent.
An investor purchased on margin Orange Computer for $30 a share. The stock's price subsequently increased...
An investor purchased on margin Orange Computer for $30 a share. The stock's price subsequently increased to $50 a share at which time the investor sold the stock. If the margin requirement is 60 percent and the interest rate on borrowed funds was 7 percent, what would be the percentage earned on the investor's funds (excluding commissions)? What would have been the return if the investor had not bought the stock on margin?
Assum e that an investor buys 100 shares of stock at $46 per share, putting up...
Assum e that an investor buys 100 shares of stock at $46 per share, putting up a 65% margin. a. What is the debit balance in this transaction? b. How much equity capital must the investor provide to make this margin transaction? a. The debit balance in this transaction is s(Round to the nearest dollar.) b. The amount of equity funds the investor must provide to make this margin transaction is s. (Round to the nearest dollar)
An investor buys 100 shares of IBM stock at the price of $200, and a put option of selling one hundred shares at a price of $202. The option price is $3 for each share. If the stock price rose to $210...
An investor buys 100 shares of IBM stock at the price of $200, and a put option of selling one hundred shares at a price of $202. The option price is $3 for each share. If the stock price rose to $210 and the investor let the option expire, what would be the gain?
An investor buys 100 shares of stock selling at $76 per share using a margin of...
An investor buys 100 shares of stock selling at $76 per share using a margin of 67%. The stock pays annual dividends of $3.00 per share. A margin loan can be obtained at an annual interest cost of 8.6%. Determine what return on invested capital the investor will realize if the price of the stock increases to $110 within six months. What is the annualized rate of return on this transaction? If the price of the stock increases to $110...
An investor buys 200 shares of stock selling at $89 per share using a margin of...
An investor buys 200 shares of stock selling at $89 per share using a margin of 59%. The stock pays annual dividends of $ 2.00 per share. A margin loan can be obtained at an annual interest cost of 9.6%. Determine what return on invested capital the investor will realize if the price of the stock increases to $111 within six months. What is the annualized rate of return on this transaction? If the price of the stock increases to...
Assume that an investor buys 100 shares of stock at $35 per share, putting up a 73% margin. a. What is the debit balance in this transaction? b. How much equity funds must the investor provide to make this margin transaction? c. If the stock rises to $54 per share, what is the investor's new margin position? a. The debit balance in this transaction is s (Round to the nearest dollar.) b. The amount of equity funds the investor must...
Assum e that an investor buys 100 shares of stock at $46 per share, putting up a 65% margin. a. What is the debit balance in this transaction? b. How much equity capital must the investor provide to make this margin transaction? a. The debit balance in this transaction is s(Round to the nearest dollar.) b. The amount of equity funds the investor must provide to make this margin transaction is s. (Round to the nearest dollar)
An investor buys 100 shares of stock selling at $76 per share using a margin of 67%. The stock pays annual dividends of $3.00 per share. A margin loan can be obtained at an annual interest cost of 8.6%. Determine what return on invested capital the investor will realize if the price of the stock increases to $110 within six months. What is the annualized rate of return on this transaction? If the price of the stock increases to $110...
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