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Given the following information, please estimate a) the margin trading return if the stock price increases...

Given the following information, please estimate a) the margin trading return if the stock price increases to $70; b) the margin trading return if the stock price decreases to $40; c) the price which triggers the margin call.

The margin requirement is 70%.

The margin call is set at 30%.

Stock price: $ 45        

            Interest rate on margin borrowing (call rate): 6%

            Expected dividend: $5

                                    Holding period: 1 year

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ANSWER IN THE IMAGE ((YELLOW HIGHLIGHTED). FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

jeff jeffy answered 1 year ago
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