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Problem 3-16 You are bullish on Telecom stock. Th...

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Problem 3-16 You are bullish on Telecom stock. The current market price is $52 per share, and you have $6,800 of your own to invest. You borrow an additional $8,800 from your broker at an interest rate of 6.5% per year and invest $15,600 in the stock. Required: (a) What will be your rate of return if the price of Telecom stock goes up by 15% during the next year? (Round your answer to 2 decimal places.Omit the "%" sign in your response.) Rate of return % (b) How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 50%? Assume the price fall happens immediately. (Round your answer to 2 decimal places. Omit the "$" sign in your response.) The price of the stock $ or

 

Paper#7078 | Written in 18-Jul-2015

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