Dée trader opens a brokerage account and purchases 300 shares of internet dreams at $36 per share. she borrows $4,500 from her broker to pay for the purchase. the interest rate on the loan is 11%. a. what is the margin in dée’s account when she first purchases the stock? b. if the share price falls to $26 per share by the end of the year, what is the remaining margin in her account? (round your answer to 2 decimal places.) c. if the maintenance margin requirement is 30%, will she receive a margin call? yes no d. what is the rate of return on her investment? (negative value should be indicated by a minus sign. round your answer to 2 decimal places.)

A) Dee´s Margin = 58.33%; B) Remaining Margin if price drops to $26 is 30.56% C) She won´t receive a margin call (but close...)

D) Rate of Return = - 32.36%

Explanation:

Hi, first let´s find out what the initial margin is, for that we have to use the following formula.

Now, in order to find the equity, we have to find the total value of the stocks and substract the debt from it, since it was 300 shares at $30 per share, the total value of the investment is $7,800, therefore, its equity is $3,300 ($7,800-$4,500).

So everything should look like this

So the initial margin was 58.33%

If the price drops to $26 by the end of the year, the remaining margin in her account is:

So the remaining margin one year later, after the stock price dropped to $26 was 30.56%

Now, in order to find the rate of return on her investment, at the end of the year, we have to remember that the money loaned was at 11%, therefore, the best way to find out the return of this investment is to convert this into money, like such.

First (Gross Return of the stock)

Ok, we have the gross return, which is -$27.78%

The interest expenses are just as follows.

To find the return on the investmen, we need to use the following formula.

The final investment is: Gross return($)+interest Expenses

This means that, by the end of the year, her return on the investment was -32.36%. In money, this is - $3,495.

Best of luck.

i would have to say its c