Suppose that XTel currently is selling at $50 per share. You buy 600 shares using...

70.2K

Verified Solution

Question

Finance

image
image
Suppose that XTel currently is selling at $50 per share. You buy 600 shares using $22,500 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8%. a. What is the percentage increase in the net worth of your brokerage account if the price of Tel immediately changes to (a) $55; (b) $50: (c) $45? (Leave no cells blank.be certain to enter "o" wherever required. Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) % a. Percentage gain b. Percentage gain c. Percentage gain % % b. If the maintenance margin is 25%, how low can XTel's price fall before you get a margin call? (Round your answer to 2 decimal places.) Price c. How would your answer to requirement 2 would change if you had financed the initial purchase with only $15,000 of your own money? (Round your answer to 2 decimal places.) Strike price d. What is the rate of return on your margined position (assuming again that you invest $ 22,500 of your own money) if XTel is selling after one year at (s) $55; (b) $50; (c) $45? (Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) a. Rate of return b. Rate of return a. Rate of return % % % e. Continue to assume that a year has passed. How low can XTel's price fall before you get a margin call? (Round your answer to 2 decimal places.) Price

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students