After Merrill Lynch analyst upgraded Coca-Cola stock on September 20, 2014, you bought on margin...
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After Merrill Lynch analyst upgraded Coca-Cola stock on September 20, 2014, you bought on margin 5,000 shares at the price of $43.91 per share. The initial percentage margin is 60% and the maintenance margin is 30%. The annual cost of the margin loan is 6%.
(a) Determine your initial margin requirement.
(b) To what price must Coca-Cola fall for you to receive a margin call on September 20, 2014?
(c) Two months later, you sold your Coca-Cola shares at the price of $44.39 per share. What was the return on your investment?
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