Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose that Xtel currently is seting at $66 per share you buy 500 shares using $20,000 of your own money, borrowing the remainder of the

image text in transcribed
image text in transcribed
image text in transcribed
Suppose that Xtel currently is seting at $66 per share you buy 500 shares using $20,000 of your own money, borrowing the remainder of the purchase price from your broket. The rate on the margin loan is 6% 6. What is the percentage increase in the net worth of your brokerage account of the price of Xtel immediately changes to (156963.00 $66, ( $6237? What is the relationship between your percentage return and the percentage change in the price of Xter? (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.) i. 11. Percentage gan Percentage gain Percentage gan % b. If the maintenance margin is 25% how low can Xter's price for before you get a margin call? (Round your answer to 2 decimal places.) Margin call will be made at price of lower c. How would your answer to change if you had financed the initial purchase with only $16.500 of your own money? (Round your answer to 2 decimal places.) Margin cal will be made at price or lower d. What is the rate of return on your margined position (assuming again that you invest $20,000 of your own money if Xtel is selling after year at 156963:() 566 ( 562 37 What is the relationship between your percentage return and the percentage change in the price of Xter Assume that Xtel pays no dividends (Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) Rate of retum Rate of our Rate ofrecen d. What is the rate of return on your margined position (assuming again that you invest $20,000 of your own money) if Xtel is selling after 1 year at: 0) $69.63 (11) $66. () $62 37? What is the relationship between your percentage return and the percentage change in the price of Xtel? Assume that Xtet pays no dividends. (Negative values should be Indicated by a minus sign. Round your answers to 2 decimal places.) i. % ii. Rate of return Rate of return Rate of return % lii. % e. Continue to assume that a year has passed. How low can Xter's price for before you get a margin call? (Round your answer to 2 decimal places.) Margin call will be made at price or lower

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions