An investor initially pays K6 000 towards the purchase of K10 000 worth of shares...
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Finance
An investor initially pays K6 000 towards the purchase of K10 000 worth of shares at K100 each borrowing the rest from a broker;
Draw up the investors simple balance sheet to reflect this transaction.
(4 marks)
Calculate the initial margin and the margin if the share price falls to K70.
(4 marks)
Suppose the maintenance margin is 30 %. How far could the stock price fall before the investor would get a margin call? Suppose the margin is 40 %. How far can the stock price fall before the investor gets a margin call? (4 marks)
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