Asset Valuation（资产估价）相关习题3 face, return, investment, price, border

cfaspace

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

A) 40%.

B) 25%.

C) 38%.

D) 36%.

Your answer: A was correct!

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 = 1,800 / 5,000 = 36%

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