You are bullish on Telecom stock. The current market price is $$20$ per share, and you have $$5,400$ of your own to invest. You borrow

an additional $$5,400$ from your broker at an interest rate of $8\%$ per year and invest $$10,800$ in the stock.

Required:

a$.$ What will be your rate of return if the price of Telecom stock goes up by $15\%$ 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 $25\%?$ Assume the

price fall happens immediately.

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

What will be your rate of return if the price of Telecom stock goes up by $15\%$ during the next 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.

Rate of return

You are bullish on Telecom stock. The current market price is $$20$ per share, and you have $$5,400$ of your own to invest. You borrow

an additional $$5,400$ from your broker at an interest rate of $8\%$ per year and invest $$10,800$ in the stock.

Required:

a$.$ What will be your rate of return if the price of Telecom stock goes up by $15\%$ 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 $25\%?$ Assume the

price fall happens immediately.

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

How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is $25\%?$ Assume

the price fall happens immediately.

Note: Round your answer to $2$ decimal places.