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In: Finance

a) Suppose that you buy 200 shares of XYZ at $80 per share and that you...

a) Suppose that you buy 200 shares of XYZ at $80 per share and that you finance $6,000 of your investment with a margin loan at 6% interest. What is your initial margin?

b) Suppose that you buy 200 shares of XYZ at $80 per share and that you finance $6,000 of your investment with a margin loan at 6% interest. If the price of one share of Company XYZ goes up 8% over the course of a year, what will be your overall rate of return?

c) Suppose that you buy 200 shares of XYZ at $80 per share and that you finance $6,000 of your investment with a margin loan at 6% interest. What price will XYZ have to be in one year in order for you to receive a margin call if your broker requires a maintenance margin of 25%?

(Do not round intermediate calculations. Negative values should be indicated by a minus sign. Round your answer to 1 decimal place.)

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Expert Solution

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

jeff jeffy answered 1 year ago
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