Problem
Your syndicate group opens a brokerage account and purchases 300 shares of Internet Dreams at R40 per share. Your syndicate borrows R4 000 from the broker to help pay for the purchase. The interest rate on the loan is 8%.
1. What is the margin in your account when you first purchase the shares?
2. If the share price falls to R30 by year-end, what is the remaining margin in your account?
3. If the maintenance margin requirement is 30%, will your syndicate receive a margin call?
4. What is the rate of return on her investment?