Suppose that you just purchased 250 shares of Beta Banana's stock for $70 per share. The initial margin requirement is 70.0%, which means the amount borrowed is $5,250. The corresponding balance sheet is below: Liabilities and Equity Stock Total assets Assets $ 17,500.00 $ 17,500.00 Loan from broker Equity Total liabilities and equity Margin percentage Required: a. Now suppose the price of the stock falls to $41 per share. What is your current margin percentage? (Round your answer to 2 decimal places.) b. Construct the balance sheet to show the current situation. $ 5,250.00 $ 12,250.00 $ 17,500.00 c. If the maintenance margin is 50%, at what stock price would you get a margin call? (Round your answer to 2 decimal places.)
Suppose that you just purchased 250 shares of Beta Banana's stock for $70 per share. The initial margin requirement is 70.0%, which means the amount borrowed is $5,250. The corresponding balance sheet is below: Liabilities and Equity Stock Total assets Assets $ 17,500.00 $ 17,500.00 Loan from broker Equity Total liabilities and equity Margin percentage Required: a. Now suppose the price of the stock falls to $41 per share. What is your current margin percentage? (Round your answer to 2 decimal places.) b. Construct the balance sheet to show the current situation. $ 5,250.00 $ 12,250.00 $ 17,500.00 c. If the maintenance margin is 50%, at what stock price would you get a margin call? (Round your answer to 2 decimal places.)
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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