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You have $30000 and your margin account requires a 60% initial margin and a maintenance of 40%. Your borrowing rate from your broker is 6%.
You have $30000 and your margin account requires a 60% initial margin and a maintenance of 40%. Your borrowing rate from your broker is 6%. Suppose Coca-Cola (KO) is selling for $50 per share. Assume no dividends, and that your borrowing rate is still 6%, what is your return if: In one year, KO is selling for $60 per share? At what price will you receive a margin call?
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