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Suppose you are optimistic on Boeing company. The current market price per share is $50, and you have $5000 of your own money to invest.
Suppose you are optimistic on Boeing company. The current market price per share is $50, and you have $5000 of your own money to invest. You decide to borrow an additional $5000 from your broker at an interested rate of 8% per year and invest $10000 in the stock. (a) How far does the price of Boeing company have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately. (b) Assume the price fall will happen after 1 year. What is your answer to the question above?
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