What is the percentage increase in the net worth

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Reference no: EM132073502

Suppose that Xtel currently is selling at $30 per share. You buy 600 shares using $13,500 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 6%.

a. What is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes to (a) $33; (b) $30; (c) $27? (Leave no cells blank - be certain to enter "0" wherever required. Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.)

a. Percentage gain %

b. Percentage gain %

c. Percentage gain %

b. If the maintenance margin is 25%, how low can Xtel’s price fall before you get a margin call? (Round your answer to 2 decimal places.)

Price $

c. How would your answer to requirement 2 would change if you had financed the initial purchase with only $9,000 of your own money? (Round your answer to 2 decimal places.)

Strike price $

d. What is the rate of return on your margined position (assuming again that you invest $13,500 of your own money) if Xtel is selling after one year at (a) $33; (b) $30; (c) $27? (Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.)

a. Rate of return %

b. Rate of return %

c. Rate of return %

e. Continue to assume that a year has passed. How low can Xtel’s price fall before you get a margin call? (Round your answer to 2 decimal places.)

Price $

Reference no: EM132073502

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