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Suppose you find the following information for Tesla stock (TSLA): The minimum margin requirement-30% Current stock price $50 per share No dividend is expected within
Suppose you find the following information for Tesla stock (TSLA): The minimum margin requirement-30% Current stock price $50 per share No dividend is expected within a year The interest rate on a margin loan is 6% per annum You have an assessment of the TSLA price probability distribution next year as below: Bear Market 0.2 45 Normal Market Bull Market Probability TSLA price 0.5 0.3 You bought 600 shares of the stock with $15,000 of your own funds. a) What would be your rate of return on this investment if you sell the stock for $62.50 one year later
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