You are bullish on
Telecom stock. The current market price is $10 per share, and you
have $1,000 of your own to invest. You borrow an additional $1,000
from your broker at an interest rate of 8.5% per year and invest
$2,000 in the stock.
a. What will be your rate of return if the price of Telecom stock goes up by 10% during the next year? (Ignore the expected dividend.) (Round your answer to 2 decimal places.)
Rate of return
%
b.
How far does the price of Telecom stock have to fall for you to get
a margin call if the maintenance margin is 30%? Assume the price
fall happens immediately. (Round your answer to 2 decimal
places.)
Stock price falls below $
You are bullish on Telecom stock. The current market price is $10 per share, and you...
You are bullish on Telecom stock. The current market price is $80 per share, and you have $8,000 of your own to invest. You borrow an additional $8,000 from your broker at an interest rate of 9.0% per year and invest $16,000 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 11% during the next year? (Ignore the expected dividend.) (Round your answer to 2 decimal places.) Rate of...
You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You borrow an additional $5,000 from your broker and invest $10,000 in the stock How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 35%? Assume the price fall happens immediately. Round your answer to two decimal places and enter the number without the...
You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You borrow an additional $5,000 from your broker and invest $10,000 in the stock. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately. Round your answer to two decimal places and enter the number without the...
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