Answer:
Explanation:
A. total value of purchase = 700*35 = 35,000
broker loan = 35,000-28,000 = 7,000
your contribution = 28,000
interest = 7% * 7000 = 490
a) % increase = (56-50)*700/28000 = 15%
b) % increase = 0%; price is same
c)% increase = (44-50)*700/28,000 = -15.00%
B.
80% = 7,000
20% = 7,000*20/80 = 1,750
reduction in value = 28,000 - 1,750 = 26,250
reduction in price per share = 26,250/700 = 37.5
price for margin call = 50 - 37.5 = 12.5
C broker contribution = 10,500
80% = 10,500
20% = 10,500*20/80 = 2,625
loss allowed per share = (17,500 - 2,625)/700 = 20.54
price for margin call = 50 - 20.54 = 29.46
