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3 years ago

5

You've borrowed $20,500 on margin to buy shares in disney, which is now selling at $41 per share. your account starts at the ini

tial margin requirement of 50%. the maintenance margin is 35%. two days later, the stock price falls to $37.50 per share.

1 answer:

il63 [147K]3 years ago

5 0

2,207.1 + 37.50 = 2,244.6

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Answer:

Year 1 $15000

Interest $1,200

<u>repayment $5,820.50</u>

Year 2 $10,379.50

Interest $830.36

<u>repayment $5,820.50</u>

Year 3 $5,389.36

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<u>repayment $5,820.50</u>

Closing balance $0

Explanation:

Year 1 Interest = $15,000 * 8% = $1,200

Closing balance at the end of year 1 = $15,000 (loan principal) + $1,200(interest) - $5,820.50 = $10,379.50

Year 2 Interest = $10,379.50 * 8% = $830.36

Closing balance at the end of year 2 = $10,379.50 (opening balance prior year) + $830.36 (interest) - $5,820.50 = $5,389.36

Year 3 Interest = $5,389.36 * 8% = $431.15

Closing balance at the end of year 3 = $5,389.36 (opening balance prior year) + $431.15 (interest) - $5,820.50 = 0

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In 3 to 4 sentences describe how you can want financially responsible

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To be financially responsible, you can keep track of how much money you spend by keeping a checkbook updated. When doing bills, buying groceries and clothes, and spending money on other activities, you use the recipes to record your spendings in the checkbook. Another way to stay financially responsible is to use a debit card more than a credit. When using a credit card, you're borrowing the Bank's money rather than your own and you have to pay them back. Slowly, that can cause more problems when late fees are added, or worse, your interest rates begin to fluctuate. I hope I helped! :)

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