hassan has recently opened a margin account. He bought 200 shares of stock in the Abington Corporation at $80 per share by paying 70 percent initial margin for the stock, and shortly thereafter received a margin call from his broker. The broker explained that hassan's new account did not meet the maintenance margin requirements of 30 percent because the price of Abington stock fell right after hassan bought it. What percentage decline must Abington experience for hassan to violate the 30 percent maintenance margin requirement?

hassan has recently opened a margin account. He bought 200 shares of stock in the Abington Corporation at $80 per share by paying 70 percent initial margin for the stock, and shortly thereafter received a margin call from his broker. The broker explained that hassan's new account did not meet the maintenance margin requirements of 30 percent because the price of Abington stock fell right after hassan bought it. What percentage decline must Abington experience for hassan to violate the 30 percent maintenance margin requirement?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Given that Local Care, Inc.'s stock is currently selling for $65 a share, calculate the amount of money that Elijah Pearson will make (or lose) on each of the following transactions. Assume that all transactions involve 100 shares of stock, and ignore brokerage commissions. Input all answers as positive values. He short-sells the stock and then repurchases the borrowed shares at $85.Total of $ . He buys the stock and then sells it some time later at $85.Total of $ . He short-sells the stock and then repurchases the borrowed shares at $50.Total of $ .
In March of this year, Ermine felt the market had nowhere to go but down. Accordingly, she sold short $15,000 of IGM stock. Her broker requires a 60% margin on short sales. Ermine covered her short position when the value of her shorted IGM shares fell to $13,000. During the time Ermine’s short position was open, IGM paid a dividend of $500. What percentage return did Ermine earn on her initial investment?
Assume you purchased 500 shares of XYZ common stock on margin at $29 per share from your broker. A. Find the following (note: fill in the blanks with values rounded to the nearest cent, no dollar signs "$", and commas "". Example: $1,234.567 >>> write as 1234.57) If the initial margin is 57%, the amount you borrowed from the broker is $ and your equity is $ B. What is the new margin if the price of share falls to $31? (note: fill in the blank with rounded % as follows: example 34.567% >>> write as 34.57%)
1) Lisa has a margin account and deposits $2500,000 into it. Assume that the prevailing margin requirement is 50%, interest and commissions are ignored and and XYZ Corp. is selling for $44 a share. a.) How many shares can Lisa purchase using the maximum allowable margin? b.) What is Lisa's profit or loss is XYZ Corp.'s stock i.) Rises to $59 and Lisa sells the stock? ii.) Falls to $32 a share and sells the stock? c.) If the maintenance margin is 30%, what price can the stock fall to before Lisa receives a margin call? 1262 20
Use the given partial stock table round dollar amounts to the nearest cent when necessary. Gary Walters owned 400 shares of stock in general electric. he purchased the shares at a price of $38.05 per share and sold them at the closing price of the stock given in the table. A) ignoring dividends what was Garry's profit or loss on the sales of the stock? B) if his broker charges 2.3% of the total sale price, what was the brokers commission? is this a profit or a loss?
In you cash account, you buy 100 shares of XYZ Corporation at a price of $10 per share. Two months later, XYZ pays a dividend $0.21 per share. You sell all 100 shares of XYZ three months later at a price of $12 per share. If you wanted to lever up the returns of this trade, you could have executed it in your _____ account. A) cash B) margin C) brokerage D) bank If you borrowed 50% of the upfront investment amount, your return (in percent terms) would have been _____. A) 11.10 B) 22.10 C) 44.20
In you cash account, you buy 100 shares of XYZ Corporation at a price of $10 per share. Two months later, XYZ pays a dividend $0.21 per share. You sell all 100 shares of XYZ three months later at a price of $12 per share. If you wanted to lever up the returns of this trade, you could have executed it in your _____ account. A) cash B) margin C) brokerage D) bank
After researching Valero Energy common stock, Sandra Pearson is convinced the stock is overpriced. She contacts her account executive and arranges to sell short 370 shares of Valero Energy. At the time of the sale, a share of common stock has a value of $39. Three months later, Valero Energy is selling for $29 a share, and Sandra instructs her broker to cover her short transaction. Total commission to buy and sell the stock were $82. What is her profit for this short transaction?
Mr. Ramon Sy has 100 SMC shares which he bought costing P13,000. He would like to sell his shares registered under his name at a market price of P136/share. His broker executed the order and the transaction was done during the day. His stockbroker charged the minimum stock broker's fee. How much is the realized gains of Mr. Sy? a. P600.00 b. P455.12 c. P405.80 d. P400.00
After researching Best Buy common stock, Sally Wang is convinced the stock is overpriced. She contacts her account executive and arranges to sell short 400 shares of Best Buy. At the time of the sale, a share of common stock had a value of $160. Three months later, Best Buy is selling for $152 a share, and Sally instructs her broker to cover her short transaction. Total commissions to buy and sell the stock were $64. What is her profit for this short transaction?
Lauren has a margin account and deposits $49,994 into it. Assume the prevailing margin requirement is 40%, interest and commisions are ignored, and the Gentry Wine Corporation is selling at $35 per share. a) How many shares can Lauren purchase using the maximum allowable margin? b) What is Lauren's profit (loss) if the price of Gentry's stock 1) rises to $45 and Lauren sells the stock? 2) falls to $25 and Lauren sells the stock? c) If the maintenance margin is 30% to what price can Gentry Wine fall before Lauren will receive a margin call?
Rob Thomas Traders opened an account to short-sell 1,000 shares of WeWork at $60. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of WeWork has risen from $60 to $76, and the stock has paid a dividend of $2.75 per share. a. What is the remaining margin in the account? b. If the maintenance margin requirement is 35%, will Rob Thomas Traders recieve a margin call?

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