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The current market price of AWZ stock is $40 per share and you have $4000 of your own to invest. You borrow an additional $4000
The current market price of AWZ stock is $40 per share and you have $4000 of your own to invest. You borrow an additional $4000 from your broker and invest $8,000 in the stock. Assume the interest rate is 4% and maintenance margin is 30%.
1) What will be your rate of return if the price goes up by 8% after 6 months?
2) What is the minimum price before a margin call after a year?
Please show your work.
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