John Lee opens a brokerage account and buys 100 shares of ABC Company at $30...
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John Lee opens a brokerage account and buys 100 shares of ABC Company at $30 per share. He borrows $1000 from his broker to help pay for the purchase. The interest on the loan is 5%. What is the margin in Johns account when he first purchased the stock? (5 points) If the share price falls to $5 per share by the end of the year, what is the margin in his account? If the maintenance margin is 40%, will he receive a margin call? How much more cash would be required to meet the margin requirement? Show all calculations. (15 points) What is the rate of return on his investment? (5 points) What is riskier? Margin buying or short-selling? (5 points)finace
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