Calculating profits on margined and unmargined investments
Claire Gerber wants to buy 300 shares of Google, which is selling in the market for $537.34 a share. Rather than liquidate all her savings, she decides to borrow through her broker at 5 percent a year. Assume that the margin requirement on common stock is 50 percent. If the stock rises to $625 a share over the next year, calculate the dollar profit and percentage return that Claire would earn if she makes the investment with 50 percent margin. Contrast these figures to what she’d make if she uses no margin.
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Financial Planning Exercise 4 Calculating profits on margined and unmargined investments Claire Gerber wants to buy...
Financial Planning Exercise 4 Calculating profits on margined and unmargined investments Claire Gerber wants to buy 100 shares of Google, which is selling in the market for $541.69 a share. Rather than liquidate all her savings, she decides to borrow through her broker at 5 percent a year. Assume that the margin requirement on common stock is 50 percent. If the stock rises to $625 a share over the next year, calculate the dollar profit and percentage return that Claire...
Claire Gerber wants to buy 400 shares of Google, which is selling in the market for...
Claire Gerber wants to buy 400 shares of Google, which is selling in the market for $534.14 a share. Rather than liquidate all her savings, she decides to borrow through her broker at 5 percent a year. Assume that the margin requirement on common stock is 50 percent. If the stock rises to $625 a share over the next year, calculate the dollar profit and percentage return that Claire would earn if she makes the investment with 50 percent margin....
Barbara buys 100 shares of DEM at $35 a share and 200 shares of GOP at...
Barbara buys 100 shares of DEM at $35 a share and 200 shares of GOP at $40 a share. She buys on margin and the broker charges interest of 10 percent on the loan. (MUST BE DONE ON EXCEL) (a) If the margin requirement is 55 percent, what is the maximum amount she can borrow? (b) If she buys the stocks using the maximum amount of borrowed money and holds the securities for a year, how much interest must she...
1. The price of Facebook stock is currently at $31.54 and you decide to buy 120...
1. The price of Facebook stock is currently at $31.54 and you decide to buy 120 shares on margin. You borrow $1,500 from your broker and finance the remainder of the purchase with your own cash. a. What is your initial percentage margin? b. If the price rises to $35, what is the net return? c. If the broker's maintenance margin is 40%, what is the minimum value that Facebook stock price can take before you are issued a margin...
A. Ms. Simwami has K40 000 in her margin account and she wants to use the...
A. Ms. Simwami has K40 000 in her margin account and she wants to use the money to buy shares of the ABC company. The initial margin requirement is 40% and ABC's stock price is currently k50. Ignore taxes, commissions and interest on the amount borrowed. If the maintenance margin is 30%, at what price would she receive a margin call from her broker? [8 Marks]
Section 1: Short case studies (2marks each, total 10 marks) 1. Salman has only AED 70,000...
Section 1: Short case studies (2marks each, total 10 marks) 1. Salman has only AED 70,000 today but needs AED 150,000 to buy a new dream car. How long will he has to wait to buy the car if she can earn 13 percent compounded annually on her savings? 2. Ali wants to have AED 70,000,000 in cash to buy a furnished apartment 5 years from today in JLT. She expects to earn 11 percent per year, compounded semiannually, on...
Barbara buys 130 shares of DEM at $33.00 a share and 190 shares of GOP at...
Barbara buys 130 shares of DEM at $33.00 a share and 190 shares of GOP at $37.00 a share. She buys on margin and the broker charges interest of 7 percent on the loan. If the margin requirement is 42 percent, what is the maximum amount she can borrow? Round your answer to the nearest cent. $ If she buys the stocks using the borrowed money and holds the securities for a year, how much interest must she pay? Round...
Dée trailer opens a brokerage account and purchases 100 Shares of Internet dreams that $60 per...
Dée trailer opens a brokerage account and purchases 100 Shares
of Internet dreams that $60 per share. She borrows $2000 from her
broker to help pay for the purchase. The interest rate on the loan
is 10% what is the margin in his account when she first purchase
the stock? If the share price falls to $50 per share by the end of
the year what is the remaining margin in her account? (Round your
answer to two decimal places.)...
Suppose you buy a round lot of Francesca Industries stock (100 shares) on 60 percent margin...
Suppose you buy a round lot of Francesca Industries stock (100 shares) on 60 percent margin when the stock is selling at $30 a share. The broker charges a 8 percent annual interest rate, and commissions are 4 percent of the stock value on the purchase and sale. A year later you receive a $0.70 per share dividend and sell the stock for $40 a share. What is your rate of return on Francesca Industries? Do not round intermediate calculations....
C. A one-month expiration call D. A one-month expiration call on the same stock with an...
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Financial Planning Exercise 4 Calculating profits on margined and unmargined investments Claire Gerber wants to buy 100 shares of Google, which is selling in the market for $541.69 a share. Rather than liquidate all her savings, she decides to borrow through her broker at 5 percent a year. Assume that the margin requirement on common stock is 50 percent. If the stock rises to $625 a share over the next year, calculate the dollar profit and percentage return that Claire...
A. Ms. Simwami has K40 000 in her margin account and she wants to use the money to buy shares of the ABC company. The initial margin requirement is 40% and ABC's stock price is currently k50. Ignore taxes, commissions and interest on the amount borrowed. If the maintenance margin is 30%, at what price would she receive a margin call from her broker? [8 Marks]
Section 1: Short case studies (2marks each, total 10 marks) 1. Salman has only AED 70,000 today but needs AED 150,000 to buy a new dream car. How long will he has to wait to buy the car if she can earn 13 percent compounded annually on her savings? 2. Ali wants to have AED 70,000,000 in cash to buy a furnished apartment 5 years from today in JLT. She expects to earn 11 percent per year, compounded semiannually, on...
Dée trailer opens a brokerage account and purchases 100 Shares
of Internet dreams that $60 per share. She borrows $2000 from her
broker to help pay for the purchase. The interest rate on the loan
is 10% what is the margin in his account when she first purchase
the stock? If the share price falls to $50 per share by the end of
the year what is the remaining margin in her account? (Round your
answer to two decimal places.)...
Suppose you buy a round lot of Francesca Industries stock (100 shares) on 60 percent margin when the stock is selling at $30 a share. The broker charges a 8 percent annual interest rate, and commissions are 4 percent of the stock value on the purchase and sale. A year later you receive a $0.70 per share dividend and sell the stock for $40 a share. What is your rate of return on Francesca Industries? Do not round intermediate calculations....
C. A one-month expiration call D. A one-month expiration call on the same stock with an ULI 32. Suppose you buy Google stock at $1,200 per share. You have $12,000 in your broker account with initial margin requirement of 50% and maintenance margin requirement of 40%. If Google stock moved up 2% during your holding period of 30 days. The APR is 10% per annual. What's your annual rate of return (ignoring commission fees)? A. 20.50%. B. 35.12% C. 25.00%...
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