Problem # 4: At the beginning of a trading day, you bought 500 shares of Jasper

Question

Problem # 4: At the beginning of a trading day, you bought 500 shares of Jasper stock at $41 a share, 100 shares of Tasper at $10 a share, and 200 shares of Casper at $20 a share. Your initial margin is 60 percent and the maintenance margin is 40 percent. Assume that your initial equity is equal to the initial margin requirement. At the end of the day, the closing price of Jasper share was $42 a share and that of Tasper was $8 a share. And the margin balance of your account was 58 percent. What was the price of Casper per share at the end of the trading day? Prepare the balance sheet using the prices at the end of the day and show that your account’s margin is 58%. Ignore the interest payments on the margin loan.

Explanation / Answer

Ans

Details Details Details Amount Ans 1 Initial Investment =60% of purchase price ((500*41)+(100*10)+(200*20))*.60     15,300.00 Value of initial margin at the end of the day 15300/60*58     14,790.00 Value of initial margin at the end of the day (500*42)+(100*8)+(200*x)*.58=14790 14790 Solving the equation , value of the X=18.5 Price of the share of casper 18.5

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.