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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