The current market price for abc is 98 per share initial, Ask an Expert

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The current market price for ABC is $98 per share. Initial margin is 50%, maintenance margin is 35% and there is no margin interest. ABC pays annual cash dividends of $4.50 per share.

1) You believe the stock price will decrease over the next year and wish to trade exactly one round lot. What trade should you make? How much margin would you have to post to your account ? At what price would you receive a margin call ?

2) Suppose you are correct and the stock falls to $36 per share at the end of the year. What is your percentage return on equity for this trade?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92791004

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