Sarah Purchased 700 Shares of Detroit Motors Stock at a Price

question 42

Multiple Choice

Sarah purchased 700 shares of Detroit Motors stock at a price of $45 a share. The initial margin requirement is 70% and the maintenance margin is 30%. The effective interest rate on the margin loan is 6.5%. How much margin interest will she pay if she repays the loan in five months?

• A)$187.29
• B)$204.12
• C)$217.29
• D)$230.42
• E)$251.25

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Definitions:

Partnership Interest

Ownership stake in a partnership, representing rights to its profits and assets.

Accounting Work

The activities involved in maintaining and auditing records and preparing financial reports for a business or individual.

Inventory

The total value of goods and materials held by a company for the purpose of resale or production.

Partnership Interest

An ownership share in a partnership that represents a portion of the entity's assets and income.