Problem $3-01$

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Problem $3-01$

You have $$36,000$ to invest in Sophie Shoes, a stock selling for $$60$ a share. The initial margin requirement is $75$ percent. Do not round intermediate calculations. Round your answers to two decimal places. Use a minus sign to enter negative values, if any.

a$.$ Ignoring interest and commissions, calculate your rate of return if the stock rises to $$80$ a share and if it declines to $$30$ a share, assuming you pay cash for the stock.

Rate of return if the stock rises to $$80$ a share:

$\%$

Rate of return if the stock declines to $$30$ a share: $1]\%$

b$.$ Ignoring interest and commissions, calculate your rate of return if the stock rises to $$80$ a share and if it declines to $$30$ a share, assuming you buy the stock using maximum leverage.

Rate of return if the stock rises to $$80$ a share:

$\%$

Rate of return if the stock declines to $$30$ a share:

$\%$