FINA-527-Assignment-

Chapter 4
2) Margin Requirement 40%, Margin Account Deposit $50,000, Price per Share $35
Let’s assume ‘’Y’’ be total investment, and ‘’x’’ number of shares
a) .4Y =$50,000, Y = $50,000/.4 =$125,000
$35x =$125,000, X =$125,000/$35 = 3571 shares
b) (i) if stock price rises to $45/share, Total profit (loss) = $45*3571 -$125,000 =$35,695
(ii) if stock price falls to $25/share, total profit(loss) =$25*3571-$125,000 =($35,725) c) Maintenance margin = (number of shares* price per share)-($125,000-$50,000)/ number of shares*price per share .3 = (3571 *price per share) -$75,000/3571*price per share Price per share =$30 7) Rate of return = selling price –cost/ cost, ($36-$24)/$24 =50% If buy at $28, ($36-$28)/$28 =29% Price didn’t go below $20
Chapter 5
1)
Stock Number of shares T T+1
A 1,000,000 $60 $80
B 10,000,000 $20 $35
C 30,000,000 $18 $25 total $98 $140 $98/3 =32.66 $140/3=46.66
a) Percentage change =46.66-32.66/32.66 =42.87% stock Number of shares Value at period T Value at period T+1
A 1,000,000 $60*1,000,000=$60,000,000 $80*1,000,000=$80,000,000
B 10,000,000 $20*10,000,000=$200,000,000 $35*10,000,000=$350,000,000
C 30,000,000 $18*30,000,000=$540,000,000 $25*30,000,000=$750,000,000
Total =$800,000,000 =$1,180,000,000
b) percentage change =$1,180,000,000-$800,000,000/$800,000,000 =47.5%

c) 42.87% is average change of price from period t to period t+1, while 47.5% is weighted average change of value from period t to period t+1

2) a)percentage change= ($4,470.60-$3,000)/$3,000 = 49%
b) percentage of price change : Stock A, ($80-$60)/60 =33.3% Stock B, ($35-$20)/$20 =75% Stock