Suppose that Xtel currently is selling at $$44$ per share. You buy $500$ shares using $$18,000$ of your own money, borrowing the

remainder of the purchase price from your broker. The rate on the margin loan is $7\%.$

Required:

a$.$ What is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes to: $($i$)$ $$50\mathrm{.}60$;

$($ii$)$ $$44$; $($iii$)$ $$37\mathrm{.}40?$ What is the relationship between your percentage return and the percentage change in the price of Xtel?

b$.$ If the maintenance margin is $25\%,$ how low can Xtel's price fall before you get a margin call?

c$.$ How would your answer to $(b)$ change if you had financed the initial purchase with only $$11,000$ of your own money?

d$.$ What is the rate of return on your margined position $($assuming again that you invest $$18,000$ of your own money$)$ if Xtel is selling

after $1$ year at: $($i$)$ $$50\mathrm{.}60$; $($ii$)$ $$44$; $($iii$)$ $$37\mathrm{.}40?$ What is the relationship between your percentage return and the percentage change

in the price of Xtel? Assume that Xtel pays no dividends.

e$.$ Continue to assume that a year has passed. How low can Xtel's price fall before you get a margin call?

Complete this question by entering your answers in the tabs below.

Continue to assume that a year has passed. How low can Xtel's price fall before you get a margin call?

Note: Round your answer to $2$ decimal places.