answer the following question.
3. How do margin trades magnify both the upside potential and the downside risk of an investment position?
14. Here is some price information on FinCorp stock. Suppose that FinCorp trades in a dealer
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a. Suppose you have submitted an order to your broker to buy at the market. At what price will your trade be executed?
b. Suppose you have submitted an order to sell at the market. At what price will your trade be executed?
c. Suppose you have submitted a limit order to sell at $55.62. What will happen?
d. Suppose you have submitted a limit order to buy at $55.37. What will happen?
15. You’ve borrowed $20,000 on margin to buy shares in Ixnay, which is now selling at $40 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $35 per share.
a. Will you receive a margin call?
b. How low can the price of Ixnay shares fall before you receive a margin call?
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