Determine the price at which there will be a margin call

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Question 1) You are an investor, which to buy 150 shares of XYZ stocks through a broker in the trading floor. Currently the price of the share is $65 and decided to use margin option. The initial margin is set for 50%, while the maintenance margin is 40%. If the price goes down to $60, what will be your equity margin? Determine the price at which there will be a margin call? If the share price goes up to $75, what will be the rate of return?

Question 2: Discuss the distinction between the Primary and the Secondary Markets. Why do you think liquidity of Secondary Market is important for the activities of primary markets.

Reference no: EM133715876

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