Valuing Investments

You’ve borrowed $45,000 on margin to buy 1,000 shares in Disney, which is now selling at $90 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two months later, the stock price has declined to $68 per share.

Will you receive a margin call?

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How low can the price of Disney shares fall before you receive a margin call?

A company has 8 percent coupon bonds on the market with 10 years left to maturity. Coupons are paid annually.

If the bond currently sells for $1,050, what is its yield to maturity?

You have a call option with strike $50 and buy a call with strike $60 The options are on the same stock and have the same maturity date

One of the calls sells for $3; the other sells for $9 (Assume zero interest rate)  What is the break-even point for this strategy, (ie, the stock price at which the net payoff is zero)? Also, are you bullish or bearish on this stock?

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