How low can off-star price fall before you get margin call

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Reference no: EM131547762

Be sure to write the formulas used and substitute values. Show your work in detailed.

1. Suppose that Off-Star currently is selling at $60 per share. You buy 100 shares, borrowing the maximum amount of the purchase price from your broker. If the initial margin is 50% and the maintenance margin is 25%, how low can Off-Star's price fall before you get a margin call? Assume the price fall happens immediately.

2. Duller Image has issued a noncallable bond that matures in 15 years. The bond has a par value of $1,000 and sells for $1,075. The bond has a 7 percent annual coupon rate. The coupon payments are made annually. What is the bond's yield to maturity?

Reference no: EM131547762

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