What is the dollar amount of borrowed funds

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1) You enter into a margin transaction with a 50% margin requirement and $30 share price for 1,000 shares.

a. What is the dollar amount of borrowed funds?

b. What is the share price at which there would be a margin call if there was a 30% reserve margin?

c. What is the leverage factor for this transaction?

d. If the share price increases 10%, what is the percent return to the investor?

e. If the share price declines 20%, what is the percent return to the investor?

f. Why is the percent return in real life nearly always worse than the returns you just calculated for the price increase and decrease?

g. Let's say you wanted some protection against a decline in the share price affecting your position; what type of order could you enter and what would be the lowest reasonable price to enter for it?

Reference no: EM132641670

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