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You purchase 1,000 shares MSFT stock on margin at a price of $150/share. The margin rate is 5% continuously compounded. The margin loan is $50,000.

You purchase 1,000 shares MSFT stock on margin at a price of $150/share. The margin rate is 5% continuously compounded. The margin loan is $50,000. You want to analyze your potential returns under three scenarios for MSFTs stock price over the next year:

i) $120/share

ii) $150/share

iii) $180/share

Fill in the table below to show your work.

Current Value

MSFT Stock Price 1-year Later

$120/share

$150/share

$180/share

Asset

Margin Loan

Equity

% Return

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