You are bullish on Telecom stock. The current market price is $62 per share, and you have $6,200 of your own to invest. You borrow an additional $6,200 from your broker at an interest rate of 7.6% per year and invest $12,400 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 9% during the next year? (Ignore the expected dividend.) (Round your answer to 2 decimal places.) Rate of return % b. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30% ? Assume the price fall happens immediately. (Round your answer to 2 decimal places.) Stock price falls below

You are bullish on Telecom stock. The current market price is $62 per share, and you have $6,200 of your own to invest. You borrow an additional $6,200 from your broker at an interest rate of 7.6% per year and invest $12,400 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 9% during the next year? (Ignore the expected dividend.) (Round your answer to 2 decimal places.) Rate of return % b. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30% ? Assume the price fall happens immediately. (Round your answer to 2 decimal places.) Stock price falls below

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You are bullish on Telecom stock. The current market price is $50 per share, and you have $5,000 of your own to invest. You borrow an additional $5,000 from your broker at an interest rate of 8% per year and invest $10,000 in the stock.a. What will be your rate of return if the price of Telecom stock goes up by 10% during the next year? The stock currently pays no dividends.b. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately.
You are bullish on IT stock. The current market price is OMR70 per share, and you have OMR8,000 of your own to invest. You borrow an additional OMR7,000 from your broker at an interest rate of 7% per year and invest OMR15,000 in the stock. What will be your rate of return if the price of Telecom stock goes up by 15% during the next year? The stock currently pays no dividends. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately.
You are bullish on IT stock. The current market price is OMR70 per share, and you have OMR8,000 of your own to invest. You borrow an additional OMR7,000 from your broker at an interest rate of 7% per year and invest OMR15,000 in the stock. What will be your rate of return if the price of Telecom stock goes up by 15% during the next year? The stock currently pays no dividends. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately. Kim opens a brokerage account and purchases 500 shares of Batliboy at OMR50 per share. She borrows OMR5,000 from her broker to help pay for the purchase. The interest rate on the loan is 7% What is the margin in Kim's account when she first purchases the stock If the share price falls to OMR40 per share by the end of the year, what is the remaining margin in her account? If the maintenance margin requirement is 30%, will she receive a…
You are bullish on Telecom stock. The current market price is $80 per share, and you have $12,000 of your own to invest. You borrow an additional $12,000 from your broker at an interest rate of 6% per year and invest $24,000 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 15% during the next year? The stock currently pays no dividends. (Negative value should be indicated by a minus sign. Round your answer to the nearest whole number.) b. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediately. (Round your answer to 2 decimal places.)
You are bullish on Telecom stock. The current market price is $110 per share, and you have $22,000 of your own to invest. You borrow an additional $22,000 from your broker at an interest rate of 6.6% per year and invest $44,000 in the stock. a. What will be your rate of return if the price of Telecom stock goes up by 8% during the next year? (Ignore the expected dividend.) (Round your answer to 2 decimal places.) b. How far does the price of Telecom stock have to fall for you to get a margin call if the maintenance margin is 30%? Assume the price fall happens immediate ly. (Round your answer to 2 decimal places.)
You are bullish on GCB stock. The current market price is GHS5.00 per share, and you have GHS5,000 of your own to invest. You borrow an additional GHS5,000 from your broker at an interest rate of 12% per year and invest the GHS10,000 in the stock. a.What will be your rate of return if the price of GCB stock goes up by 20% during the next year? b.How far does the stock of GCB stock have to fall for you to get a margin call if the maintenance margin is 30%.
You consider buying a share of stock at a price of $950. The stock is expected to pay a dividend of $10 next year, and your advisory service tells you that you can expect to sell the stock in 1 year only for $945. What is the expected rate of return?
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You are bullish on XYZ stock. The current market price is $100 per share, and you have $10,000 of your own to invest. You borrow an additional $10,000 from your broker at an interest rate of 8% per year and invest $20,000 in the stock. WHAT IS THE margin call if the maintenance margin is 30%? Assume the price IS $115 one year LATER.
You are bullish on Unum stock. The current market price is $50 per share, and you have $4,000 of your own to invest. You borrow an additional $4,000 from your broker at an interest rate of 8.5% per year and invest the $8,000 in the stock. What will be your rate of return on the stock if it goes up by 9.36% during the next year? Group of answer choices 7.64% 10.22% 10.53% 13.57% 12.29%
b) Your broker has advised you to buy shares of Fast repair computer repair shop, which has paid a dividend of $2 per share annually and will (according to the broker) continue to do so for many years. The stock is currently priced at $18. You have good reason to think that the appropriate rate of return for this stock is 13% per year. Is the stock's present price a good approximation for the true financial value? What would you like to pay for the share and should you buy or sell now?
Suppose you are bullish on stock SPYR. It is trading at $388.55 on September 19,2022, but you believe the price will rise in the near future. You put $20,000 towards thepurchase of 100 shares of stock SPYR and borrow the remaining cost from your broker. Yourbroker requires a maintenance margin level of 15%. What is the range of stock prices suchthat you receive a margin call? Assume the borrowing rate is zero regardless of the actualholding period. Round your answer to two decimal places. Detailed explanation using formulas, not excel. A. $221.82 or lowerB. $163.96 or lowerC. $235.29 or lowerD. $173.91 or lower

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