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Dée Trader opens a brokerage account and purchases 300 shares of Internet Dreams at $38 per share. She borrows $4,300 from her broker to help pay for the purchase. The interest rate on the loan is 9%.
a. What is the margin in Dée’s account when she first purchases the stock?
Margin $ 7100
b-1.
If the share price falls to $28 per share by the end of the year, what is the remaining margin in her account? (Round your answer to 2 decimal places.)
Remaining margin %
c.
What is the rate of return on her investment? (Negative value should be indicated by a minus sign.Round your answer to 2 decimal places.)
Rate of return %
I initially thought i knew how to do this but i dont. Part a was super easy and that is the right answer but part b i have no idea. I thought all you had to do was find out how much equity you had after the price dropped which is $4100 and then divide it by how much you stocks were worth $8400 to get the remaining margin % but my hw has an answer check and it says im wrong. The answer i got was 48.81% from dividing 4100 by 8400.
Part C im not too sure if someone could help on that
a. What is the margin in Dée’s account when she first purchases the stock?
Margin $ 7100
b-1.
If the share price falls to $28 per share by the end of the year, what is the remaining margin in her account? (Round your answer to 2 decimal places.)
Remaining margin %
c.
What is the rate of return on her investment? (Negative value should be indicated by a minus sign.Round your answer to 2 decimal places.)
Rate of return %
I initially thought i knew how to do this but i dont. Part a was super easy and that is the right answer but part b i have no idea. I thought all you had to do was find out how much equity you had after the price dropped which is $4100 and then divide it by how much you stocks were worth $8400 to get the remaining margin % but my hw has an answer check and it says im wrong. The answer i got was 48.81% from dividing 4100 by 8400.
Part C im not too sure if someone could help on that
Help with buying stock on Margin?
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