Reference no: EM132459985

Problem: Marlene Bellamy purchased 500 shares of Writeline Communications stock at $56.28 per share using the prevailing minimum initial margin requirement of 52 %.

She held the stock for exactly 6 months and sold it without any brokerage costs at the end of that period. During the 6?-month holding? period, the stock paid $ 1.54 per share in cash dividends. Marlene was charged 7.5 % annual interest on the margin loan. The minimum maintenance margin was 25%.

Required:

Question 1: Calculate the initial value of the? transaction, the debit balance?, and the equity position on? Marlene's transaction.

Question 2: For each of the following share? prices, calculate the actual margin? percentage, and indicate whether? Marlene's margin account would have excess? equity, would be? restricted, or would be subject to a margin? call: ?(1) $ 44.16?, ?(2) $ 71.48?, and? (3) $ 34.85.

Question 3: Calculate the dollar amount of? (1) dividends received and? (2) interest paid on the margin loan during the 6?-month holding period.

Question 4: Use each of the following sale prices at the end of the 6?-month holding period to calculate? Marlene's annualized rate of return on the Writeline Communications stock? transaction:?(1) $ 50.36, ?(2) $ 60.53, and? (3) $ 70.15.