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Suppose that Xtel currently is selling at $ 5 4 per share. You buy 4 5 0 shares using $ 1 0 , 0 0
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:
aWhat is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes to: i $; ii $; iii $ What is the relationship between your percentage return and the percentage change in the price of Xtel?
bIf the maintenance margin is how low can Xtels price fall before you get a margin call?
cHow would your answer to b change if you had financed the initial purchase with only $ of your own money?
dWhat is the rate of return on your margined position assuming again that you invest $ of your own money if Xtel is selling after year at: i $; ii $; iii $ What is the relationship between your percentage return and the percentage change in the price of Xtel? Assume that Xtel pays no dividends.
eContinue to assume that a year has passed. How low can Xtels price fall before you get a margin call?
PLEASE I need the answer with the numbers
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