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I. A stock is currently trading at $25 per share and an investor buys 200...

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Accounting

I. A stock is currently trading at $25 per share and an investor buys 200 shares into a brokerage account that requires a 60% initial margin and has a maintenance margin of 40%. a) What price does the stock have to fall to for you to receive a margin call?

b) If the stock price falls to $14 and you decide to sell the stock to close out your position, what is your return

II. Next year, your expectations about the return of Coca Cola is that it could take one of three possible values with the following probabilities:

Possible rate of return Probability

-5.21% 0.35

6.25% 0.45

18.75% 0.25

What is the expected return of the stock and the standard deviation of Coca Cola?

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