You are bullish on Telecom stock. The current market price is $$50$ per share, and you have $$6,200$ of your own to invest. You borrow an additional $$6,200$ from your broker at an interest rate of $8\%$ per year and invest $$12,400$ in the stock.

Required:

a$.$ What will be your rate of return if the price of Telecom stock goes up by $10\%$ during the next year? The stock currently pays no dividends.

b$.$ How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is $40\%?$ Assume the price fall happens immediately.

Complete this question by entering your answers in the tabs below.

Required $A$

Required B

What will be your rate of return if the price of Telecom stock goes up by $10\%$ during the neft year? The stock currently pays no dividends.

Note: Negative value should be indicated by a minus sign. Enter your answer as a percent rounded to the nearest whole number.

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Rate of return

$\%$