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Suppose Stock XYZ is selling at $30 per share. You buy 1,000 shares, using $18,000 of your own money, and borrow the remainder. The rate
Suppose Stock XYZ is selling at $30 per share. You buy 1,000 shares, using $18,000 of your own money, and borrow the remainder. The rate on the margin loan is 8% per year a. What is your total return on the investment if in 12 months, the price changes to $27, $30, $33 per share. b. If the maintenance margin is 25%, at what price will you get a margin call? i. What if you only used 10,000 of your own money?
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