Discuss the impact of margining on your return

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Reference no: EM131568167

You are bullish on Apple(AAPL). The current price is $50/share and you have $5,000 of your own to invest. You then borrow an additional $5,000 from your broker at an interest rate of 8% per year and invest a total of $10,000 in the stock. The stock does not pay a dividend.

a. What is the return on your investment if the price of FB stock rises by 10% during the next year?

b. What is the return on your investment if the price of FB falls by 10% during the next year?

c. Discuss the impact of margining on your return.

Reference no: EM131568167

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