Ask Question
BusinessBusiness
23 July, 01:05

Shares of RossCorp stock are selling for $45 per share. Brokerage commissions are 2% for purchases and 2% for sales. The interest rate on margin debt is 6.25% per year. The maintenance margin is 30

+3
Answers (1)
  1. 23 July, 01:24
    0
    The price at which a margin call would be received is $28.929.

    Explanation:

    The stated question does not contain complete information. The remaining information is as follows.

    Assume that you purchase 150 shares of RossCorp stock at $45 each by making a margin deposit of 55 percent. At what price would you receive a margin call?

    The price is calculated using the formula for maintenance margin as follows.

    Maintenance margin = Equity in account / Value of stock

    Equity in account = (Shares purchased x Call price) - (Shares purchased x Remaining ratio x Sale price)

    Equity in account = (150 x P) - (150 x 0.45 x 45)

    = 150P - 3037.5

    Value of stock = Shares purchased x Call price

    = 150P

    Inserting these values into the formula for maintenance margin:

    0.3 = (150P - 3037.5) / 150P

    45P = 150P - 3037.5

    105P = 3037.5

    P = 28.929

    Hence, the price at which a margin call would be received is $28.929.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Shares of RossCorp stock are selling for $45 per share. Brokerage commissions are 2% for purchases and 2% for sales. The interest rate on ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Pauline Davis's charge account statement shows an unpaid balance of $225. The monthly finance is 1.25% of an unpaid balance. What is the new balance account?
Answers (1)
The total liabilities of Novak Corp. decreased by $97000 during the month of August 2022. Stockholders' equity increased by $43000 during this period. By what amount and in what direction must total assets have changed during August?
Answers (1)
Suppose that a worker in Radioland can produce either 4 radios or 1 television per year, and a worker in Teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers.
Answers (1)
Heinz Company began operations on January 1, 2017, and uses the FIFO method in costing its raw material inventory.
Answers (1)
The Brown Jug has paid annual dividends of $0.61, $0.64, $0.71, $0.82, and $0.88 per share over the past 5 years, respectively. What is the geometric average dividend growth rate for this period? Top of Form a. 8.51 percent b. 8.97 percent c. 9.
Answers (1)
New Questions in Business
For a portfolio of 40 randomly selected stocks, which of the following is most likely to be true? a. The beta of the portfolio is less than the weighted average of the betas of the individual stocks. b.
Answers (1)
What publication can give you an idea of how administrative jobs are going to change in the future? A: Office Pro B: Occupational Outlook Handbook C: From 9 to 5 D: The Executary
Answers (1)
At a four-way stop, if two cars arrive at the intersection at the same time: A) the larger car has the right of way B) the vehicle on the right yields to the vehicle on the left C) the smaller car has the right of way D) the vehicle on the left
Answers (1)
Suppose we are interested in bidding on a piece of land and we know one other bidder is interested. The seller announced that the highest bid in excess of $10,000 will be accepted.
Answers (1)
Zappos, the online shoe and clothing marketer, promises free shipping and free returns on any of its products, no questions asked. This is an example of how Zappos has a strong competitive advantage through
Answers (1)
Home » Business » Shares of RossCorp stock are selling for $45 per share. Brokerage commissions are 2% for purchases and 2% for sales. The interest rate on margin debt is 6.25% per year. The maintenance margin is 30
Sign Up Forgot Password?