Six months ago, you purchased 600 shares of stock on margin. The initial margin requirement...
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Finance
Six months ago, you purchased 600 shares of stock on margin. The initial margin requirement on your account is 60% and the maintenance margin is 40%. The call money rate plus the spread is 5%. The purchase price was $15 per share.
#1) How much did you borrow 6 months ago? That is, what is the margin loan?
#2) At what price (P*) would you receive a margin call?
Today, you sold these shares for $17 each.
#3) What is your new margin now?
#4) What is your Effective Annual Return (EAR)?
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