How much must the price of micro-tech stock decline

Assignment Help Financial Accounting
Reference no: EM132565767

John Jones recently opened a margin account with the Evergreen Investment Company. Evergreen currently has a 65% initial margin requirement and a 35% maintenance margin. Mr. Jones initially purchases 300 shares of Micro-Tech stock at $50 per share.

Question a. By how much must the price of Micro-Tech stock decline before a margin call is required?

Question b. If the market price of Micro-Tech falls to $15, how much must Mr. Jones deposit in his brokerage account to maintain the minimum margin requirement?

Question c. If the price of Micro-Tech stock rises to $75 per share. What will Mr. Jones's one-period return be? Ignore commission fees, but assume that an interest rate of 12% on borrowed funds, and assume that no cash dividends were received.

Question d. Recalculate Mr. Jones's annual return assuming that he received a $4 a share cash dividend.

Reference no: EM132565767

Questions Cloud

Experiment-aerobic respiration in beans : What are the controls in this experiment, and what variables do they eliminate? Why is it important to have a control for this experiment?
What will be the value if the required rate of return is now : You invested in a $5,000 bond in 2012 with a coupon rate of 6%. What will be its value in 2018 if the required rate of return is now 8%?
Discuss why policy practitioners need variety of skills : Discuss why policy practitioners need a variety of skills, rather than only one or two, to be effective in changing policies.
Number of chromosomes in gametes : Why is it necessary to reduce the number of chromosomes in gametes, but not in other cells?
How much must the price of micro-tech stock decline : If the market price of Micro-Tech falls to $15, how much must Mr. Jones deposit in his brokerage account to maintain the minimum margin requirement?
Why are some of the sugar or sweetener solutions : Why are some of the sugar or sweetener solutions were not metabolized, while others were. Explain how it would affect yeast respiration.
What are the pros and cons of making edible : What are the pros and cons of making edible, non-toxic food from petroleum.
What is the political machine : What is the political machine? What impact do you believe the political machine has on the American election process?
Estimate what is the firm degree of financial leverage : What is the firm's degree of financial leverage? Round the answer to two decimals.Irresistible Chips is reviewing its financial condition.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd