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1) Kwame is interested in buying shares on the stock market but has limited funds. He currently has Ghs5500 but to give him leverage and hopefully make more money, he borrowed an additional Ghs 4500 from his senior brother Kojo at no interest cost and bought 2000 shares of ABC stock at GHs5.0 per share. This made up of his own equity funds and the borrowed funds from his brother. Assuming no brokerage charges, calculate a) at what price Kwame's equity position in the investment will reach 80% b) at what price Kwame's equity position will be zero.

2) An investor places a limit order to buy 2000 shares of the XYZ company at Ghs 4.05 per share or better. The next transaction prices in order are GHs 4.081, 4.09, 4,04, 4.05, 4.06. How much did the investor spend in purchasing the 2000 shares of XYZ including brokerage fee of 2.5%? Assume that all 2000 shares were obtained at one price.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92722207

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