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After seeing Elon Musks tweet Am considering taking Tesla private at $420. Funding secured, you felt very bullish on Tesla. The stock was trading at

After seeing Elon Musks tweet Am considering taking Tesla private at $420. Funding secured, you felt very bullish on Tesla. The stock was trading at $350 per share. You had $10,000 of your own to invest. You borrowed an additional $7,500 from Robinhood and invested all in Tesla. Robinhood charges you an interest rate of 5% per year on the margin loan and requires a 40% maintenance margin. 1) How far could Tesla stock price fall before you get a margin call? 2) It turned out that the tweet was misleading, as there was no funding secured for Elon to take Tesla private. The SEC fined Elon for misleading investors. Tesla stock price dropped to $230 upon the news. Would you get a margin call, and for how much? 3) You held on to your Tesla stocks for two years and finally sold them at $2000 per share before Teslas 5-to-1 stock split in late 2020. Tesla did not pay any dividend. What is the return on your trading strategy over the two-year holding period? 4) What is your annualized rate of return (assuming annual compounding)?

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