Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

can someone show me how they reached the answer for both parts please and thank you You are bullish on Telecom stock. The current market

image text in transcribed

can someone show me how they reached the answer for both parts please and thank you

You are bullish on Telecom stock. The current market price is $10 per share and you have $1,000 or your own to invest. You borrow an additional $1,000 from your broker at an interest rate or 8.5% per year and invest $2,000 in the stock. a. What will be your rate of return it me price of Telecom stock goes up by 10% during the next year? (Ignore the expected dividend) Rate or return % b. How far does the price or Telecom stock have to fall for you to get a margin call it the maintenance margin is 30%? Assume the price fall happens immediately. Stock price rails below $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Futures And Options Markets

Authors: John Hull

9th Edition

0134083245, 9780134083247

More Books

Students also viewed these Finance questions