Suppose that Xtel currently is selling at $$72$ per share. You buy $400$ shares using $$22,000$ 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$)$ $$79\mathrm{.}92$; $($ii$)$ $$72$; $($iii$)$ $$64\mathrm{.}08?$ What is the relationship between your percentage return and the percentage change in the price of $x$ tel?

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 $$14,400$ of your own money?

d$.$ What is the rate of return on your margined position $($assuming again that you invest $$22,000$ of your own money$)$ if Xtel is selling after $1$ year at: $($i$)$ $$79\mathrm{.}92$; $($ii$)$ $$72$; $($iii$)$ $$64\mathrm{.}08?$ What is the relationship between your percentage return and the percentage change in the price of Xtel? Assume that Xtel pays ryo dividends.

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