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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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