At what price would you receive margin call

Assignment Help Financial Management

Reference no: EM131931889

1. Assume you buy 800 shares of a stock selling for $15 a share, borrowing $4,000 at an interest rate of 6% to help finance the purchase. Your account has a maintenance margin of 40%.

A. At what price would you receive a margin call?

B. If, after one year, the price increased to $20 a share, what would be your rate of return?

2. Assume you buy a $1,000 face value bond with 7 years until maturity, a coupon rate of 5% paid semiannually, and a yield to maturity of 8%.

A) What is the price of this bond?

B) Assume that the yield to maturity falls to 7% after one year, and the investor decides to sell the bond. What would be the holding period return for the investor?

Reference no: EM131931889

Questions Cloud

Which is the better investment after five years : If both funds’ portfolios have an average return of 12%, which is the better investment after 5 years given an initial investment of $5,000?

Student loans-what is loan balance after the grace period : What is the loan balance after the grace period? If Nolan decides to pay an additional $50 per payment, how many payments will amortize the debt?

Government offers two types of one-year discount bonds : Imagine that the Korean government offers two types of one-year discount bonds in December 2017.

What is the portfolio turnover ratio : What is the net asset value (NAV)? What is the portfolio turnover ratio?

At what price would you receive margin call : At what price would you receive a margin call? If, after one year, the price increased to $20 a share, what would be your rate of return?

Which is the better investment after five years : If both funds’ portfolios have an average return of 12%, which is the better investment after 5 years given an initial investment of $5,000?

Constraint the payments of dividends : What are the 3 variables that can constraint the payments of dividends?

What would be holding period return for the investor : Assume that the yield to maturity falls to 7% after one year, and the investor decides to sell the bond. What would be holding period return for the investor?

What is estimate of the stock current price : The company's stock has a beta of 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock's current price?

User Account

All Pages