You long 1000 shares of ABC at $25 a share. Assume the Regulation T rate is...
- You long 1000 shares of ABC at $25 a share. Assume the Regulation T rate is 40%. You send the required amount to your broker. After a week ABC jumps to $27 in the market.
- Show your account.
- What is your buying power?
- Suppose you withdraw the maximum allowable cash from your account. Show your account.
Homework Answers
Money needed to buy 1000 share of ABC @$25/share= 1000*25*40%=$10000
So, you have send $10000 to your broker.
a. Value of account= Initial Deposit+Profit/Loss=10000+(27-25)*1000=12000
b. buying power=12000/0.4=$30000
c. To hold the ABC share @$27/share you need =27*1000*40%=$10800
So, you can withdraw (12000-10800)=$1200 from your account and you will have 1000 share of ABC for $27/share
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