# YOU NEED THE FOLLOWING INFORMA

YOU NEED THE FOLLOWING INFORMATION TO ANSWER THE FOLLOWING 3 QUESTIONS.

Assume that you will buy stock on margin (i.e., stock margin trading). Assume that Texas Instruments Corp stock is currently selling for \$50 per share. Assume that you will purchase 500 shares on July 29, 2021, at 11:00 AM. You have \$15,000 of your own to invest and you will borrow an additional \$10,000 from your broker at an interest rate of 10% per year. Assume that the Maintenance Margin is 40%.

(1.) What is the initial position (on July 29, 2021, at 11:00 AM.) using the balance sheet equation. In other words, which of the following presents the balance sheet using this information?

A.——————ASSETS————————————————LIAB & OWN EQUITY

———————Stock=\$25,000—————————————Liab =\$15,000

——————————————————————————– Equity=\$10,000

B.————–ASSETS——————————————-LIAB & OWN EQUITY

—————– Stock=\$25,000———————————-Liab = \$10,000

———————————————————————–Equity =\$15,000

C———————ASSETS————————————-LIAB & OWN EQUITY

——————- Stock=\$15,000————————————– Liab = \$0

Equity = \$15,000

D.———————ASSETS—————————————-LIAB & OWN EQUITY

——————-Stock = \$25,000 ——————————Liab = \$11,000

—————————————————————————Equity = \$ 14,000

E. None of the Above

(2) Which of the following presents the balance sheet if the stock price increases to \$100 per share, July 29, 2021, at 11:01 AM. In other words, which of the following presents the balance sheet using this info?

A.————–ASSETS—————————————LIAB & OWN EQUITY

————–Stock = \$50,000 ———————————–Liab = \$10,000

————————————————————————- Equity = \$40,000

B.————- ASSETS——————————————— LIAB & OWN EQUITY

———– Stock \$25,000 ————————————– Liab = \$10,000

————————————————————————– Equity = \$15,000

C.————– ASSETS ———————————————- LIAB & OWN EQUITY

————– Stock = \$50,000 —————————————– Liab = \$11,000

————————————————————————————Equity = \$39,000

D. ——————— ASSTETS——————————————— LIAB & OWN EQUITY

—————— Stock = \$50,000 —————————————- Liab = \$20,000

—————————————————————————————Equity = \$ 30,000

E. None of the Above

(3)Which of the following presents the balance sheet if the stock price increases to \$100 per share July 29, 2022, AT 11:00 AM. In other words, which of the following presents the balance sheet using this new information?

A.——————-ASSETS—————————————– LIAB & OWN EQUITY

——————-Stock = \$50,000 ——————————— Liab = \$10,000

——————————————————————————Equity = \$40,000

B.——————ASSETS —————————————— LIAB & OWN EQUITY

—————— Stock = \$25,000 ————————————-Liab = \$10,000

——————————————————————————-Equity = \$15,000

C. ——————-ASSETS——————————————- LIAB & OWN EQUITY

——————Stock = \$50,000 ———————————– Liab = \$11,000

——————————————————————————– Equity = \$39,000

D.————ASSETS ————————————————LIAB & OWN EQUITY

————– Stock = \$50,000 ——————————————- Liab = \$21,000

——————————————————————————— Equity \$ 29,000

E.————–ASSETS ————————————————- LIAB & OWN EQUITY

————Stock = \$50,000—————————————– Liab = \$22,000

——————————————————————————–Equity = \$ 28,000

(THNAK YOUfor simple multiple choice explained)

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