USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 24

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Kathy Smith has a margin account with a balance of $60,000. Initial margin requirements are 80 percent, and Jackson Industries is currently selling at $40 per share.
-Refer to Exhibit 3.3. What is Kathy's profit if Jackson's price rises to $50?

• A) $18,750
• B) $15,750
• C) $55,000
• D) $37,750
• E) $28,570

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Definitions:

Utils

A hypothetical unit of measurement used in economics to quantify the amount of utility or satisfaction gained by consuming goods and services.

Outcomes

The results or effects of actions, decisions, or policies, with a broader application beyond purely economic contexts.

Risk Averse

A preference for certainty over uncertainty with regards to outcomes, particularly in the context of financial decisions.

Certain Income

An assured or guaranteed stream of income, usually referring to investments with fixed returns.