XYZ Corp. is doing well and its stock price is expected to rise The current market price is $100 per share, and you have $9000 of your own to invest. Initial margin requirement is 60%. You borrow money to match the initial margin requirements and invest the total in this stock. Call money rate is 6% and the broker charges 1.75% service fee on top of this for the loan they have given you. This stock paid a dividend of $2 per share and the broker charged $1 per share as commission.

Show the T-table with your initial position and margin calculations If XYZ stock goes up 10% next year, what is the rate of return? How far does the price of XYZ have to fall for you to get a margin call if the maintenance margin is 30%. Assume that the price fall happens immediately. How much additional cash you would need to deposit immediately?