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32. You are bullish on Telecom stock. The current...

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Question

32. You are bullish on Telecom stock. The current market price is $50 per share, and you have $6,900 of your own to invest. You borrow an additional $5,100 from your broker at an interest rate of 6% per year and invest $12,000 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 15% during the next year? (ignore dividend) b. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 40%? Assume the price fall happens immediately.

 

Paper#8653 | Written in 18-Jul-2015

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