What is the margin rate in this market

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Questions -

Q1. You have $3,000 to invest. You lose -40% ($1,200 loss) when stock market goes down -4%. What is the Margin rate in this market?

Q2. Current Earning is $100 per year and the Index is 1,000 and 10 year yield is 16% per year.

(A) Analyze whether it is How much Over or Under or Fairly-priced and

(B) Calculate the Fair Index Level. (Show All Work)

Q3. You tell your broker to sell 1,000 shares @$100 ($100,000) and 50% margin requirement on short sales. You have $50,000 T-bills.

If maintenance margin on short sales = 10%. This means the equity in your account must be at least 10% of the value of your short position at all times.

How far could the stock price RISE before the investor would get margin call?

Reference no: EM133165998

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