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You borrow $25,000 and buy 1000 shares of Facebook at $50 per share on margin. The interest on the loan is 5%. One year from
You borrow $25,000 and buy 1000 shares of Facebook at $50 per share on margin. The interest on the loan is 5%. One year from now the price is $51.25. Assume no dividends are paid. Calculate your rate of return and the final margin %. 1. rate of return=0%, final margin=48.8% 2. rate of return=0%, final margin=50% 3. rate of return=-5%, final margin=48.8% 4. rate of return=-5%, final margin=50% 5. None of the above
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