answer 3.5

TABLE 3.4 Illustration of buying stock on margin End-of-Year Repayment of Change in Value of Principal and Investor's Rate Stock Price Shares Interest of Return 30% increase $26.000 $10,900 51% No change 20,000 10,900 -9 30% decrease 14,000 10,900 -69 Assuming the investor huys $20,000 worth of stock by borrowing $10.000 at an interest rate of 9% per year. 3.5 Suppose that in the IBM example above, the investor borrows only $5,000 at the same inter- est rate of 9% per year. What will the rate of return be if the price of IBM goes up by 30%? If it goes down by 30%? If it remains unchanged