Increase in net worth of your brokerage account

Assignment Help Financial Management
Reference no: EM131852743

Suppose that Xtel is currently selling at $50/share. You buy 700 shares using $28,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 7%.

A. What is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes to (a) $56; (b) $50; (c) $44

B. If the maintenance margin is 20%, how low can Xtel's price fall before you get a margin call?

C. How would your answer to requiremwnt 2 change if you had finances the initial purchase with only $17,500 of your own money? (strike price)

D. What is the rate of return on your margined position (assuming you invest $28,000 of yur own money) if Xtel is selling after one year at (a) $56 (b) $50 (c) $44?

E. Continue to assume that a year has passed, how low can Xtel's price fall before you get a margin call?

Reference no: EM131852743

Questions Cloud

Company is considering three major projects : A company is considering three major projects labeled A, B and C. It also includes the effects of the time value of money
Self-fulfilling prophecies : Self-fulfilling prophecies refer to beliefs or expectations that can bring about enhanced (or impaired) performance. Research by Eden (2003)
Why you think the business is using the pricing strategy : Discuss why you think the business is using the pricing strategy that you did.Match each business with the pricing strategy that you believe the business is use
Would it have changed the outcome of the test : In our example problem in suppose we had used X for the text messaging condition and Y for the no distractions condition.
Increase in net worth of your brokerage account : What is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes
State formally the null and alternative hypotheses : (a) State formally the null and alternative hypotheses necessary to conduct a non directional test. (b) Complete the test at the .05 level of significance
How much has value of home changed based on the calculator : How much has the value of the home changed based on the CPI calculator? When oil prices drop, who benefits and who loses? Why? How?
Create components of an online community : Create components of an online community as they might apply to the specific use cas you choose now.
What is the contribution margin for each doll sold : How many dolllars in sales does this represent? What is the contribution margin for each doll sold?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd