Suppose that Xtel currently is selling at $$52$ per share. You buy $500$ shares using $$20,000$ of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is $9\%.$

Required:

a$.$ What is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes to: $($i$)$ $$56\mathrm{.}68$; $($ii$)$ $$52$; $($iii$)$ $$47\mathrm{.}32?$ 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 $$13,000$ of your own money?

d$.$ What is the rate of return on your margined position $($assuming again that you invest $$20,000$ of your own money$)$ if $x$ tel is selling $.$ after $1$ year at: $($i$)$ $$56\mathrm{.}68$; $($ii$)$ $$52$; $($iii$)$ $$47\mathrm{.}32?$ 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?

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What is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes to: $($i$)$ $$56\mathrm{.}68$; $($ii$)$ $$52$; $($iii$)$ $$47\mathrm{.}32?$ What is the relationship between your percentage return and the percentage change in the price of Xtel?

Note: Leave no cells blank $-$ be certain to enter $"0"$ wherever required. Negative values should be indicated by a minus sign. Round your answers to $2$ decimal places.

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