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You are bullish on Tesla. The current market price is $500. You have $25,000 of your own and you borrow $25,000 from your broker at
You are bullish on Tesla. The current market price is $500. You have $25,000 of your own and you borrow $25,000 from your broker at an interest rate of 5% per year and buy 100 shares of Tesla.
- What will be your rate of return if Tesla goes up by 50% in the next year?
- If Tesla stock price starts falling instead of going up, at what point would you get a margin call from your broker if the maintenance margin is 30%?
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