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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 $5000 from your broker at an interest rate of 8% per

  1. 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. (LO 3-4)

    1. What will be your rate of return if the price of Telecom stock goes up by 10% during

the next year? (Ignore the expected dividend.)

    1. 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.

Jun 16 2020 View more View Less

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