Reading 52: Organization and Functioning of Securities Ma

答案和详解如下：

6.An investor short sells 400 shares of Disney for $25 a share. The initial margin requirement (IMR) is 50 percent, and the maintenance margin requirement (MMR) is 25 percent.

At what price would an investor receive a margin call?

A)   $30.00.

B)   $20.00.

C)   $22.00.

D)   $35.00.

The correct answer was A)

P_s = [25(1 + 0.5)] / 1.25P_s = 30.00.

7.Calculate the return on investment, when the stock price drops to $20 a share.

A)   25%.

B)   40%.

C)   38%.

D)   36%.

The correct answer was B)

Proceeds from sale = 400 × $25 = $10,000

Initial margin requirement = $10,000 × 50% = $5,000

Total funds in account = $10,000 + $5,000 = $15,000

Total value of securities (TV) = 400 × 20 = $8,000

Equity = total funds – dollars needed to buy back shares = 15,000 – 8,000 = $7,000

Profit = 7,000 – 5,000 = $2,000

Return = 2,000 / 5,000 = 40%

8.Using the following assumptions, calculate the rate of return on a margin transaction for an investor who purchases the stock and the stock price at which the investor who shorts the stock will receive a margin call.

 Market Price Per Share: $25

 Number of Shares Purchased: 1,000

 Holding Period: 1 year

 Ending Share Price: $22

 Initial Margin Requirement: 50%

 Maintenance margin: 25%

 Transaction and borrowing costs: $0

 The company pays no dividends

What of the following choices is closest to the correct answer? The margin transaction return and margin call are:

       Margin Transaction Return    Margin Call

A)                                       -24.00%        $16.67

B)                                       -12.00%        $16.67

C)                                       -24.00%        $30.00

D)                                       -12.00%        $30.00

The correct answer was C)

To obtain the result:

Calculate Margin Return:

      Margin Return % = [((Ending Value  - Loan Payoff) / Beginning Equity Position) – 1] * 100

     = [(([$22 * 1,000] – [$25 * 1,000 * 0.50]) /  ($25 * 0.50 * 1,000)) – 1] * 100

    = -24.00%. 

      Alternative (Check): Calculate the all cash return and multiply by the margin leverage factor.

                               = [(22,000 – 25,000)/25,000] * [1 / 0.50] = -12.00% * 2.0 = -24.00%

Calculate Margin Call Price:

      Since the investor is short (sold the stock), the formula for the margin call price is:

              Margin Call = (original price) * (1 + initial margin) / (1 + maintenance margin)

              = $25 * (1 + 0.50) / (1 + 0.25) = $30.00

9.Helen Alba and Kobin Lubis have deferring views on the future performance of U-Cite. Consequently, Alba has taken a short position while Lubis has purchased the stock on margin. The relevant details are as follows:

 Market price per share: $42

 Number of shares purchased: 1,000

 Holding period: 1 year

 Ending share price: $50

 Initial margin requirement: 45%

 Maintenance margin: 30%

 Transaction and borrowing cost: $0

Alba and Lubis will receive margin calls at a stock price of:

       Alba        Lubis

A)           $37.66          $53.45

B)           $46.85    $53.45 

C)           $46.85    $33.00 

D)           $37.66          $33.00

The correct answer was C)

Calculations are as follows:

Since Alba is short (sold the stock), the formula for the margin call price is:

Margin Call = (original price) * (1 + initial margin) / (1 + maintenance margin)

= $42 * (1 + 0.45) / (1 + 0.30) = $46.85

Since Lubis is long (purchased the stock), the formula for the margin call price is:

Margin Call = (original price) * (1 – initial margin) / (1 – maintenance margin)

= $42 * (1 – 0.45) / (1 – 0.30) = $33.00