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Q1: You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You
Q1: You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of 8% per year and invest $10,000 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 10% during the next year? b. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately. c. Assume the price falls immediately to $30 and the maintenance margin is again 30%. Will you get a margin call? If yes, how much cash do you need to deposit to restore the maintenance margin? If you don't have any cash. how many shares do you have to sell
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