Exhibit 4.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Jackie has a margin account with a balance of $150,000. The initial margin deposit is 60 percent and Turtle Industries is currently selling at $50 per share.
-Refer to Exhibit 4.1. What is Jackie's profit/loss if Turtle's price after one year is $40?
A)$50,000
B)-$50,000
C)$100,000
D)-$100,000
E)None of the above

Question

Quizplus · Accepted Answer

Jackie initially buys 5,000 shares ($150,000 / 60% / $50). If the price drops to $40, the value is $200,000 (5,000 shares * $40). The loss is $50,000 ($250,000 initial value - $200,000).

Exhibit 4.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)