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Problem 3 - 2 4 ( Algo ) Suppose that XTel currently is selling at $ 3 0 per share. You buy 6 0 0
Problem Algo
Suppose that XTel currently is selling at $ per share. You buy shares using $ of your own money, borrowing the
remainder of the purchase price from your broker. The rate on the margin loan is
Required:
a What is the percentage increase in the net worth of your brokerage account if the price of XTel immediately changes to i $; ii $; ii $Leave no cells blank be certain to enter wherever required. Negative values should be indicated by a
minus sign. Round your answers to decimal places.
i Percentage Gain:
ii Percentage Gain:
iii Percentage Gain:
CORRECT ANSWERS:
b If the maintenance margin is how low can XTel's price fall before you get a margin call? Round your answer to decimal places.
Price:
WRONG ANSWER: $
c How would your answer to requirement b would change if you had financed the initial purchase with only $ of your own money? Round your answer to decimal places.
Price:
WRONG ANSWER: $
d What is the rate of return on your margined position assuming again that you invest $ of your own money if XTel is selling after one year at i $; ii $; iii $Negative values should be indicated by a minus sign. Round your answers to decimal places.
i Rate of Return:
ii Rate of Return:
iii Rate of Return:
WRONG ANSWERS:
eContinue to assume that a year has passed. How low can XTels price fall before you get a margin call?Note: Assume maintenance margin of Round your answer to decimal places.
Price:
WRONG ANSWERS: $
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