How far can the stock price fall before

Reference no: EM133369409

Questions:

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?

Reference no: EM133369409

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