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Suppose that Xtel currently is selling at $50 per share. You buy 300 shares using $10,000 of your own money, borrowing the remainder of the
Suppose that Xtel currently is selling at $50 per share. You buy 300 shares using $10,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8%. a. What is the percentage Increase in the net worth of your brokerage account if the price of Xtel Immediately changes to: (0) $54.00 (II) $50; (III) $46.00? What is the relationship between your percentage return and the percentage change in the price of Xtel? (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.) i. ii. iii. Percentage gain Percentage gain Percentage gain b. If the maintenance margin Is 25%, how low can Xtel's price fall before you get a margin call? (Round your answer to 2 decimal places.) Margin call will be made at price or lower c. How would your answer to (b) change if you had financed the initial purchase with only $7,500 of your own money? (Round your answer to 2 decimal places.) Margin call will be made at price or lower d. What is the rate of return on your margined position (assuming again that you Invest $10,000 of your own money) if Xtel is selling after 1 year at: (0) $54.00: (1) $50; (III) $46.00? What is the relationship between your percentage return and the percentage change in the price of Xtel? Assume that Xtel pays no dividends. (Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) i. Rate of return ii. Rate of return iii. Rate of return e. Continue to assume that a year has passed. How low can Xtel's price fall before you get a margin call? (Round your answer to 2 decimal places.) Margin call will be made at price or lower
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