Assume that an investor buys 250 shares of stock at $ 36.55 per share, putting up a 46 % margin. a. What is the value of the position? b. How much equity capital must the investor provide to make this margin transaction? c. What is the debit balance in this transaction? a. The value of the position is $ nothing. (Round to the nearest dollar.) b. The amount of equity funds the investor must provide to make this margin transaction is $ nothing. (Round to the nearest dollar.) c. The debit balance in this transaction is $ nothing. (Round to the nearest dollar.)

Question

Marlene Henson

Business

10 December, 15:33

Assume that an investor buys 250 shares of stock at $ 36.55 per share, putting up a 46 % margin. a. What is the value of the position? b. How much equity capital must the investor provide to make this margin transaction? c. What is the debit balance in this transaction? a. The value of the position is $ nothing. (Round to the nearest dollar.) b. The amount of equity funds the investor must provide to make this margin transaction is $ nothing. (Round to the nearest dollar.) c. The debit balance in this transaction is $ nothing. (Round to the nearest dollar.)

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Harper Hutchinson · Answer 1

Debit balance is transaction amount minus margin: (250 * $36.55) - 0.46 * (250 * $36.55) = $4934.25

Equity is the margin amount, or 0.46 * (250 * $36.55) = $4203.25

Margin = (Value - Debit balance) / Value = [ (250 * $46) - $4934.25] : (250 * $46) = 57.09%.