Help with Part B

1. Suppose that Xtel currently is selling at $30 per share. You buy 1,000 shares using $20,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8%.
   1. What is the percentage increase in net worth of your brokerage account if the price of Xtel immediately changes to:
      1. $35
         1. 25% increase (35(1000)-10000=25000. (25000-20000/20000=25%)
      2. $30
         1. 0% (30000-10000=20000. 20000-20000/20000=0%
      3. $25
         1. -25% decrease (25(1000)-10000=15000 (15000-20000)/20000=-25%
   2. If the maintenance margin is 30% how low can Xtels price fall before you get a margin call?