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Ike, an investor, is considering opening a margin account and investing $2,000 in Mike's mutual fund. The terms of the account require that he pay
Ike, an investor, is considering opening a margin account and investing $2,000 in Mike's mutual fund. The terms of the account require that he pay back the amount he borrowed on the margin by the end of the year with 10 percent interest. Ike is trying to decide what level of margin he wants. For example, if he chooses an account at the level of 50 percent, the bank will let him borrow and invest an additional $1,000, or 50 percent of his original $2,000. Complete the table below by filling in Ike's account value at the end of the year, given varying levels of the margin account and mutual fund performance. Assume that Mike's mutual fund will return 40 percent per year in a stellar market and 5 percent per year in a fair market, and that in a terrible market, it will lose 35 percent. Instructions: Round vour answers to the nearest dollar. Consider a stock whose value increases across an 8-year period as shown in the table. Instructions: Round your answers to two decimal places. a. Calculate the percentage change in the value of the stock from year to year. b. Calculate the percentage change in the value of the stock across the entire 8-year period. % c. Do you think this qualifies as a bubble? Yes, because the percentage change in the stock value has increased greatly. Yes, because the percentage change in the stock value is positive every year. No, because the percentage change in the stock value fluctuates up and down across the 8 years. No, because the percentage change in the stock value has not increased
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