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Suppose that Xtel currently is selling at $$46$ per share. You buy $250$ shares using $$8,000$ of your own money, borrowing the

remainder of the purchase price from your broker. The rate on the margin loan is $6\%.$

Required:

a$.$ What is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes to: $($i$)$

$$48\mathrm{.}76$; $($ii$)$ $$46$; $($iii$)$ $$43\mathrm{.}24?$ What is the relationship between your percentage return and the percentage change in the price of

Xtel?

b$.$ If the maintenance margin is $25\%,$ how low can Xtel's price fall before you get a margin call?

c$.$ How would your answer to $(b)$ change if you had financed the initial purchase with only $$5,750$ of your own money?

d$.$ What is the rate of return on your margined position $($assuming again that you invest $$8,000$ of your own money$)$ if Xtel is selling

after $1$ year at: $($i$)$ $$48\mathrm{.}76$; $($ii$)$ $$46$; $($iii$)$ $$43\mathrm{.}24?$ What is the relationship between your percentage return and the percentage

change in the price of Xtel? Assume that Xtel pays no dividends.

e$.$ Continue to assume that a year has passed. How low can Xtel's price fall before you get a margin call?

Complete this question by entering your answers in the tabs below.

Required $A$

Required C

How would your answer to $(b)$ change if you had financed the initial purchase with only $$5,750$ of your own money?

Note: Round your answer to $2$ decimal places.

Margin call will be made at price

or lower