Mr. Juan Dela Cruz has a margin account with a balance of P100,000. The initial margin deposit is 50% and ABC Corporation is currently selling at P100 per share. a. How many shares can Mr. Juan Dela Cruz can buy? b. What will be Mr. Juan Dela Cruz profit if the ABC Corporation’s price increase to P120? c. If the maintenance margin is 25%, to what price can ABC Corporation stock price fall before Mr. Juan Dela Cruz receives a margin call?
Mr. Juan Dela Cruz has a margin account with a balance of P100,000. The initial margin deposit is 50% and ABC Corporation is currently selling at P100 per share. a. How many shares can Mr. Juan Dela Cruz can buy? b. What will be Mr. Juan Dela Cruz profit if the ABC Corporation’s price increase to P120? c. If the maintenance margin is 25%, to what price can ABC Corporation stock price fall before Mr. Juan Dela Cruz receives a margin call?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Mr. Juan Dela Cruz has a margin account with a balance of P100,000. The initial margin deposit is 50% and ABC Corporation is currently selling at P100 per share.
a. How many shares can Mr. Juan Dela Cruz can buy?
b. What will be Mr. Juan Dela Cruz profit if the ABC Corporation’s price increase to P120?
c. If the maintenance margin is 25%, to what price can ABC Corporation stock price fall before Mr. Juan Dela Cruz receives a margin call?
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