9. You are bullish on Telecom stock. The current market price is $50 per share, and you

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9. 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 at an interest rate of 8% per year and invest $10,000 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.)

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.

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Investments

ISBN: 9780077261450

8th Edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

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Question Posted: Jul 23, 2024 11:02 AM

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9. You are bullish on Telecom stock. The current market price is $50 per share, and you

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Investments

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