You are bullish on Telecom stock. The current market price is $30 per share, and you...

You are bullish on Telecom stock. The current market price is $30 per share, and you have $6,000 of your own to invest. You borrow an additional $6,000 from your broker at an interest rate of 7% per year and invest $12,000 in the stock.

a.	What will be your rate of return if the price of Telecom stock goes up by 5% during the next year? The stock currently pays no dividends. (Negative value should be indicated by a minus sign. Round your answer to the nearest whole number. Omit the "%" sign in your response.)

Rate of return

%

b.	How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately. (Round your answer to 2 decimal places.Omit the "$" sign in your response.)

Margin call will be made at price

$ or lower

rev: 03_13_2017_QC_CS-82418

References

eBook & Resources

Expert Solution

jeff jeffy answered 3 years ago

You are bullish on Telecom stock. The current market price is $50 per share, and you...

You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of 8% per year and invest $10,000 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 10% during the next year? (Ignore the expected dividend.) b. How far does the price of Telecom stock...

You are bullish on Telecom stock. The current market price is $90 per share, and you...

You are bullish on Telecom stock. The current market price is $90 per share, and you have $13,500 of your own to invest. You borrow an additional $13,500 from your broker at an interest rate of 7.8% per year and invest $27,000 in the stock. What will be your rate of return if the price of the stock goes up by 10% during the next year? (Ignore the expected dividend.) Please explain

You are bullish on Telecom stock. The current market price is $10 per share, and you...

You are bullish on Telecom stock. The current market price is $10 per share, and you have $1,000 of your own to invest. You borrow an additional $1,000 from your broker at an interest rate of 8.5% per year and invest $2,000 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 10% during the next year? (Ignore the expected dividend.) (Round your answer to 2 decimal places.) Rate of...

You are bullish on Telecom stock. The current market price is $80 per share, and you...

You are bullish on Telecom stock. The current market price is $80 per share, and you have $8,000 of your own to invest. You borrow an additional $8,000 from your broker at an interest rate of 9.0% per year and invest $16,000 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 11% during the next year? (Ignore the expected dividend.) (Round your answer to 2 decimal places.) Rate of...

You are bullish on Telecom stock. The current market price is $20 per share, and you...

You are bullish on Telecom stock. The current market price is $20 per share, and you have $2,000 of your own to invest. You borrow an additional $2,000 from your broker at an interest rate of 7.5% per year and invest $4,000 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 9% during the next year? How far does the price of Telecom stock have to fall for you...

You are bullish on BL stock. It is currently trading at $50 per share. You have...

You are bullish on BL stock. It is currently trading at $50 per share. You have $6,000 and want to invest as much as possible into this stock. The initial margin requirement for the stock is 40% and the maintenance margin is 25%. The broker charges 5% on borrowed margin funds. A) How many shares can you purchase, if you utilize your margin account fully? B) Suppose in exactly one year, the stock is now trading at $70 and you...

The current price of Parador Industries stock is $44 per share. Current sales per share are...

The current price of Parador Industries stock is $44 per share. Current sales per share are $21.35, the sales growth rate is 4 percent, and Parador does not pay a dividend. The expected return on Parador stock is 13 percent. a. Calculate the sales per share one year ahead. (Round your answer to 2 decimal places.) b. Calculate the P/S ratio one year ahead. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

3. You are bullish on Apple stock, which is currently selling at $110 per share. You...

3. You are bullish on Apple stock, which is currently selling at $110 per share. You contribute $11,000 and borrow an additional $2,750 from your broker at an interest rate of 6% per year and invest $13,750 in the stock. (a) What is your rate of return if the stock price increases 10% during the next year? (b) How far does the stock price have to fall for you to get a margin call if the maintenance margin is 30%?...

The current stock price for a company is $42 per share, and there are 6 million...

The current stock price for a company is $42 per share, and there are 6 million shares outstanding. This firm also has 230,000 bonds outstanding, which pay interest semiannually. If these bonds have a coupon interest rate of 9%, 10 years to maturity, a face value of $1,000, and an annual yield to maturity of 7.8%, what is the percent market value of debt for this firm? (Answer to the nearest hundredth of a percent, but do not use a...

The current stock price for a company is $48 per share, and there are 5 million...

The current stock price for a company is $48 per share, and there are 5 million shares outstanding. The beta for this firms stock is 1.2, the risk-free rate is 4.2, and the expected market risk premium is 6.4%. This firm also has 120,000 bonds outstanding, which pay interest semiannually. These bonds have a coupon interest rate of 6%, 10 years to maturity, a face value of $1,000, and an annual yield to maturity of 8.1%. If the corporate tax...

Question