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Unformatted text preview: c) Execution uncertainty but not price uncertainty 4) Dee Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $40 per share. She borrows $4,000 from her broker to help pay for the purchase. The interest rate on the loan is 8%. a) What is the margin in Dee account when she first purchase the stock? b) If the share price falls to $30 per share by the end of the year, what is the remaining margin in her account? If the maintenance margin requirement is 30%, will she receive a margin call? c) What is the rate of return on her investment?...
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- Fall '11