Exhibit 4.7
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

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%.
-Refer to Exhibit 4.7.Assume that you purchase 150 shares of RossCorp stock at $45 each by making a margin deposit of 55%.At what price would you receive a margin call?
A) $29.39
B) $26.48
C) $50.39
D) $28.93
E) $50.10

Question

Exhibit 4.7
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

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%.
-Refer to Exhibit 4.7.Assume that you purchase 150 shares of RossCorp stock at $45 each by making a margin deposit of 55%.At what price would you receive a margin call?
A) $29.39
B) $26.48
C) $50.39
D) $28.93
E) $50.10

Quizplus · Accepted Answer

0.30 = [(150)(P)- (0.45)(150)(45)]/[(150)(P)]
0.30 = [(150)(P)- 3,037.50]/[(150)(P)]
45P = 150P - 3037.50
-105P = -3037.50
P = $28.93

Exhibit 4.7 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)