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Suppose that Xtel currently is selling at $62 per share. You buy 300 shares using $12,000 of your own money, borrowing the remainder of the
Suppose that Xtel currently is selling at $62 per share. You buy 300 shares using $12,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 9%. a. What is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes to: () $66.65; m) $62; () $57.35? 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 "o" wherever required. Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) L. % II. M. 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 $9,300 of your own money? (Round your answer to 2 decimal places.)
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