Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
You are bullish on ABC stock. The current market price is $80 per share, and you have $10,000 of your own to invest. You borrow
You are bullish on ABC stock. The current market price is $80 per share, and you have $10,000 of your own to invest. You borrow an additional $10,000 from your broker at an interest rate of 8% per year and invest $20,000 in the stock. a. What will be your rate of return if the price of ABC stock goes up by 9% during the next year? The stock currently pays no dividends. (Negative value should be indicated by a minus sign. Enter your answer as a percent rounded to the nearest whole number.) Rate of retum b. How far does the price of ABC stock have to fall for you to get a margin coll if the maintenance margin is 30%? Assume the price fall happens immediately. (Round your answer to 2 decimal places.) Margin cal will be made at price or lower
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started