You are bullish on X Corp stock. The current stock price is $50 per share. You have
Question:
You are bullish on X Corp stock. The current stock price is $50 per share. You have $35,000 of your own, and you borrow an additional $25,000 from your broker.
1. How many shares did you buy?
2. How far can the stock price fall before your receive a margin call if the maintenance margin is 40%?
3. After receiving a margin call, how much additional cash do you need to put in your account to restore the 50% initial margin requirement?
4. Assume that you hold the position for a year and pay 5% interest on the loan. What is your rate of return from this investment when the stock price increases to $80 per share?
Applied Calculus
ISBN: 9781119275565
6th Edition
Authors: Deborah Hughes Hallett, Patti Frazer Lock, Andrew M. Gleason, Daniel E. Flath, Sheldon P. Gordon, David O. Lomen, David Lovelock, William G. McCallum,