Suppose you want to buy 10,000 shares of Ultra Universe Company at a price of 4.00. You put up P10,000 and borrow the rest. This is the balance sheet and margin: Balance Sheet: Asset Amount (P) Liabilities Amount (P) Investments in Ultra Universe Company 40,000 Margin Loan 30,000 Account Equity 10,000 Total Assets 40,000 Total Liabilities & Equities 40,000 Margin = (Equity / Total Assets) = (10,000 / 40,000) = 25% QUESTION: Supposed that you shorted 10,000 shares instead of buying. The initial margin is 60 percent. What would the account balance sheet look like instead?
Suppose you want to buy 10,000 shares of Ultra Universe Company at a price of 4.00. You put up P10,000 and borrow the rest. This is the balance sheet and margin: Balance Sheet: Asset Amount (P) Liabilities Amount (P) Investments in Ultra Universe Company 40,000 Margin Loan 30,000 Account Equity 10,000 Total Assets 40,000 Total Liabilities & Equities 40,000 Margin = (Equity / Total Assets) = (10,000 / 40,000) = 25% QUESTION: Supposed that you shorted 10,000 shares instead of buying. The initial margin is 60 percent. What would the account balance sheet look like instead?
Chapter12: Balanced Scorecard And Other Performance Measures
Section: Chapter Questions
Problem 7EA: Assume Skyler Industries has debt of $4,500,000 with a cost of capital of 7.5% and equity of...
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Suppose you want to buy 10,000 shares of Ultra Universe Company at a price of 4.00. You put up P10,000 and borrow the rest. This is the
Balance Sheet:
Asset | Amount (P) | Liabilities | Amount (P) |
Investments in Ultra Universe Company | 40,000 | Margin Loan | 30,000 |
Account Equity | 10,000 | ||
Total Assets | 40,000 | Total Liabilities & Equities | 40,000 |
Margin = (Equity / Total Assets) = (10,000 / 40,000) = 25%
QUESTION: Supposed that you shorted 10,000 shares instead of buying. The initial margin is 60 percent. What would the account balance sheet look like instead?
![Suppose you want to buy 10,000 shares of Ultra Universe Company at a price of 4.00. You put up
P10,000 and borrow the rest. This is the balance sheet and margin:
Balance Sheet:
Asset
Amount (P)
Liabilities
Amount (P)
Investments in Ultra Universe
40,000
Margin Loan
30,000
Company
Account Equity
Total Liabilities & Equities
10,000
Total Assets
40,000
40,000
Margin = (Equity / Total Assets) = (10,000 / 40,000) = 25%
QUESTION: Supposed that you shorted 10,000 shares instead of buying. The initial margin is 60
percent. What would the account balance sheet look like instead?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6c41692d-bc33-488e-87dd-342ac863ccf3%2F81e06b8f-a617-4043-a47b-2f3bd8342931%2Fxqtfx2o_processed.png&w=3840&q=75)
Transcribed Image Text:Suppose you want to buy 10,000 shares of Ultra Universe Company at a price of 4.00. You put up
P10,000 and borrow the rest. This is the balance sheet and margin:
Balance Sheet:
Asset
Amount (P)
Liabilities
Amount (P)
Investments in Ultra Universe
40,000
Margin Loan
30,000
Company
Account Equity
Total Liabilities & Equities
10,000
Total Assets
40,000
40,000
Margin = (Equity / Total Assets) = (10,000 / 40,000) = 25%
QUESTION: Supposed that you shorted 10,000 shares instead of buying. The initial margin is 60
percent. What would the account balance sheet look like instead?
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