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Suppose you buy 100 shares of stock XYZ at $10 a share with a margin of...

Suppose you buy 100 shares of stock XYZ at $10 a share with a margin of 50%. You also buy 200 shares of stock ABC at $50 a share with an 60% margin. You are very sure that, in six month, the price of the first stock would be $15 because you got insider information, but you are not so sure about the price of the second stock. Suppose you want to achieve a 20% return from your portfolio, then the price of the second stock needs to be at least how much to achieve that goal. (Assuming the broker charges you an 6% margin loan interest and the stocks pay no dividend)

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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