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You are interested in buying Lyft shares. You have $5,000 in cash and your broker offers you a margin loan for 4% interest rate and
You are interested in buying Lyft shares. You have $5,000 in cash and your broker offers you a margin loan for 4% interest rate and initial margin of 40%. You took the loan and purchased Lyft shares for Po. When the price changes to P1, what is your new equity, new margin, and return on investment? Instructions for this question: Po is the closing price of Lyft on March 8, 2021. P1 is the closing price of Lyft on March 9, 2021. In your calculations, do not ignore the cost of financing O A. Equity is $4,945, margin is 39.796, and the return on investment is -1.196. O B. Equity is $4,645, margin is 37.3%, and the return on investment is -7.1%. O C. Equity is $4,617, margin is 38.1%, and the return on investment is -7.7%. O D. Equity is $4,317, margin is 35.6%, and the return on investment is -13.7%
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