c. How would your answer to (b) change if you had financed the initial purchase with only $11,000 of your own money? (Round your answer to 2 decimal places.) Margin call will be made at price or lower d. What is the rate of return on your margined position (assuming again that you invest $18,000 of your own money) if LMN is selling after 1 year at: (i) $50.60; (ii) $44; (iii) $37.40? What is the relationship between your percentage return and the percentage change in the price of LMN? Assume that LMN pays no dividends. (Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) i. % Rate of return Rate of return lii. % iii. Rate of return % e. Continue to assume that a year has passed. How low can LMN's price fall before you get a margin call? (Round your answer to 2 decimal places.) Margin call will be made at price or lower 11 Suppose that LMN stock currently is selling at $44 per share. You buy 500 shares using $18,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 7%. a. What is the percentage increase in the net worth of your brokerage account if the price of LMN immediately changes to: (i) $50.60; (ii) $44; (iii) $37.40? What is the relationship between your percentage return and the percentage change in the price of LMN? (Leave no cells blank - be certain to enter "O" wherever required. Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) 8 01:59:01 i. % ii. Percentage gain Percentage gain Percentage gain % iii. % b. If the maintenance margin is 25%, how low can LMN's price fall before you get a margin call? (Round your answer to 2 decimal places.) Margin call will be made at price or lower c. How would your answer to (b) change if you had financed the initial purchase with only $11,000 of your own money? (Round your answer to 2 decimal places.) Margin call will be made at price or lower c. How would your answer to (b) change if you had financed the initial purchase with only $11,000 of your own money? (Round your answer to 2 decimal places.) Margin call will be made at price or lower d. What is the rate of return on your margined position (assuming again that you invest $18,000 of your own money) if LMN is selling after 1 year at: (i) $50.60; (ii) $44; (iii) $37.40? What is the relationship between your percentage return and the percentage change in the price of LMN? Assume that LMN pays no dividends. (Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) i. % Rate of return Rate of return lii. % iii. Rate of return % e. Continue to assume that a year has passed. How low can LMN's price fall before you get a margin call? (Round your answer to 2 decimal places.) Margin call will be made at price or lower 11 Suppose that LMN stock currently is selling at $44 per share. You buy 500 shares using $18,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 7%. a. What is the percentage increase in the net worth of your brokerage account if the price of LMN immediately changes to: (i) $50.60; (ii) $44; (iii) $37.40? What is the relationship between your percentage return and the percentage change in the price of LMN? (Leave no cells blank - be certain to enter "O" wherever required. Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) 8 01:59:01 i. % ii. Percentage gain Percentage gain Percentage gain % iii. % b. If the maintenance margin is 25%, how low can LMN's price fall before you get a margin call? (Round your answer to 2 decimal places.) Margin call will be made at price or lower c. How would your answer to (b) change if you had financed the initial purchase with only $11,000 of your own money? (Round your answer to 2 decimal places.) Margin call will be made at price or lower
