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How much money will you have to place in your margin account

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Question - XYZ Ltd is selling at K45 a share. You would like to buy 200 shares for your preferred price of K42 a share using 60% margin. XYZ pays no dividends and the interest rate on a margin loan is 6%. You have two types of orders at your disposal: Limit buy order and Stop loss order

A. Which of the two types of orders would you place to buy XYZ at your preferred price?

B. Assuming your order in part A gets executed, how much money will you have to place in your margin account?

C. Which of the two types of orders would you place after buying XYZ in order to ensure that the shares are sold if they drop to K35?

D. With the price drop to K35 calculate the return on your investment following a sale at this price.

E. Describe two (2) characteristics of a good market.

Reference no: EM132539379

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