How much cash does mhf need to invest

Assignment Help Financial Management

Reference no: EM132012902

Suppose Miracle Hedge Fund (MHF) buys 50 shares of Phantastic Corp. at $10 each. Its brokerage firm Super Broke Brothers Inc. (SBB) sets a margin requirement of 20% and charges an interest rate of r = 6% on the loan for purchasing the shares.

How much cash does MHF need to invest?

Calculate the margin call of SBB if the price falls to $8.

What is the return for MHF on the transaction after the price decline?

How is the return on cash influenced by a change in the interest rate r?

Does your answer depend on the size of the margin requirement?

Suppose that instead MHF short sells 20 shares of Awful Inc. at $20 each. Again, SBB now sets a margin requirement of 30%

How much cash does MHF need to invest? Calculate the margin call of SBB if the price increases to $25.

Reference no: EM132012902

Questions Cloud

Develop an understanding of social determinants of health : This assessment will provide students with the opportunity to develop an understanding of social determinants of health and how these influence health outcomes

What is the vector of expected returns on the stocks : Assuming the CAPM holds, what is the vector of expected returns on the stocks in the market?

Calculate the value of a : When spheres of radius r are packed in a body-centered cubic arrangement, they occupy 68.0% of the available volume. Calculate the value of a

How much would each investment have been worth : Assuming that his investments grew at the rates given in the table to the right, approximately how much would each investment have been worth at the end of 2011

How much cash does mhf need to invest : How much cash does MHF need to invest? Calculate the margin call of SBB if the price falls to $8.

What is the most you are willing to lend the borrower : Given you want to earn a 10 percent rate of return per year, what is the most you are willing to lend the borrower?

Determine the volume of the solid : What principle is being used here to determine the volume of the solid?

What is the amount of the annual withdrawal : One year later (end of year 21) I make the first of 10 equal annual withdrawals from that fund, the last which brings the balance to zero.

Find the current dividend per share : If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?

User Account

All Pages