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14. Suppose that XTel currently is selling at $40 per share. You buy 500 shares using $15,000 of your own money, borrowing the remainder of
14. Suppose that XTel currently is selling at $40 per share. You buy 500 shares using $15,000 of your own money, borrowing the remainder of the purchase from your broker. The rate on the margin loan is 8% a year. a. What is the percentage increase in the net worth of your brokerage account if the price immediately changes to $40 per share?| b. If the maintenance margin is 25%, how low can XTel's price fall before you get a margin call? c. What is the rate of return on your margined position if XTel is selling after one year at $44? Assume XTel pays no dividends
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