The effective interest rate on the margin loan

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Reference no: EM131011264

1. Ina purchased 800 shares of Detroit Motors stock at a price of $55 a share. The initial margin requirement is 65 percent and the maintenance margin is 30 percent. The effective interest rate on the margin loan is 4.69 percent. How much margin interest will she pay if she repays the loan in seven months?

A. $387.29

B. $401.32

C. $417.29

D. $530.42

E. $647.96

2. Aaron purchased 300 shares of a technology stock for $16.80 a share. The initial margin requirement on this stock is 85 percent and the maintenance margin is 60 percent. What is the lowest the stock price can go before he receives a margin call?

A. $4.43

B. $5.55

C. $6.30

D. $8.33

E. $10.03

3. What is the purpose of a margin call?

A. to inform you that your margin loan is due and payable

B. to demand funds to increase your margin position

C. to let you know the amount of funds that are now available for you to borrow

D. to advise you that the interest rate on your loan has changed

E. to remind you of the upcoming monthly payment due on your margin loan

Reference no: EM131011264

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The effective interest rate on the margin loan : Ina purchased 800 shares of Detroit Motors stock at a price of $55 a share. The initial margin requirement is 65 percent and the maintenance margin is 30 percent. The effective interest rate on the margin loan is 4.69 percent. How much margin interes..

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What is the purpose of a margin call : What is the purpose of a margin call?

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