What stock price level would you get margin call

Assignment Help Financial Management
Reference no: EM131997871

1. You purchased 1000 shares of CSCO common stock on margin at $19 per share. Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin.

a. $12.86

b. $15.75

c. $19.67

d. $13.57

2. U.S Treasury bills are paying about 0.2 percent, and the estimated market risk premium (based on large common stocks) is about 8 percent. Apple (AAPL) has an estimated beta of 1.44. Using the SML approach, what's the return on equity of Apple stock?

A. 11.72%

B. 11.32%

C. 11 %

D. 10.32 %

Reference no: EM131997871

Questions Cloud

What is the maximum share price that happy times : What is the maximum share price that Happy Times should be willing to pay for Joe’s?
What is the market price of this bond : A treasury bond is quoted at a price of 104.8640. What is the market price of this bond if the face value is $5000?
Pension plan is obligated to make disbursements : A pension plan is obligated to make disbursements of $2.4 million, $3.4 million, and $2.4 million at the end of each of the next three years, respectively.
What is the annual rate of return of your investment : What is the annual rate of return of your investment? What cash flows will you pay and receive from your investment in the bond per $ 100 face value?
What stock price level would you get margin call : Assume the initial margin is 50%, and the maintenance margin is 30%. Below what stock price level would you get a margin call?
Discounted payback period of the proposed investment : Compute the? IRR, simple payback? period, and discounted payback period of the proposed investment.
What is maximum price you will pay for stock today : What is the maximum price you will pay for the stock today if you want to earn a return of 11%? (Round your answer to 2 decimal places.)
Explain the current stock price and rationalize : Explain the current stock price and rationalize why it hasn't decreased significantly?
Compute duration and convexity for the bond : What is the yield-implied price for the bond? Compute duration and convexity for the bond. What do you conclude about the accuracy of the two rules?

Reviews

Write a Review

Financial Management Questions & Answers

  Accident victim has received a structured settlement

An accident victim has received a structured settlement. According to the terms of the agreement, the victim will receive $10,000 per year at the end of each year for the next 10 years. Additionally, the victim will receive $20,000 in 10 years.

  Confidence intervals for the four different investments

Calculate the? 95% confidence intervals for the four different investments included in the following table. Small Stocks ?S&P 500 Corporate Bonds ?T-Bills. The? 95% confidence interval of small stocks is between ____% and ____%. ?

  Inventory right parenthesis divided by current liabilities

Your firm successfully issued new debt last? year, but the debt carries covenants.? Specifically, you can only pay dividends out of earnings made after the debt issue and you must maintain a minimum quick? (acid-test) ratio left parenthesis Current A..

  What incremental free cash flows

what incremental free cash flows should be included to account for the need to accelerate the purchase of the tank? cars?

  What is the effective cost of its trade credit

Andrews Corporation buys on terms of 1/8, net 45 days, it does not take discounts, and it actually pays after 58 days. What is the effective cost of its trade credit? (Use a 365-day year.)

  What happened to the following traditional investment banks

Define what happened to the following traditional investment banks in 2008-2009. Goldman Sachs Bear Stearns Morgan Stanley Lehman Brothers Merrill Lynch 2.

  The current yield on santoss outstanding bonds

Santos energy has 9.5% annual coupon bonds outstanding with 15 years left until maturity. The bonds have a face value (FV) of $1,000 and their current market price (PV) is $1,111.76. what is the YTM on Santos’s bonds? What is the current yield on San..

  Explain the five general types of cost behavior

Define cost behavior. Identify and explain the five general types of cost behavior.

  What is the effective annual return

What’s the effective annual return Friendly’s earns on this lending business?

  What is the pretax cost of debt and aftertax cost of debt

Drogo, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 16 years to maturity that is quoted at 105 percent of face value. The issue makes semiannual payments and has an embedded cost of 10 percent annually. Wh..

  What do you expect prices of bonds to be in twelve years

What do you expect the prices of these bonds to be in twelve years? What do you expect the prices of these bonds to be in twenty years?

  What does the stock sell for today

D. S. Trucking Company stock pays a $1.50 dividend every year without fail. A year ago, the stock sold for $25 per share, and its total return during the past year was $20%. What does the stock sell for today?

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