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Suppose that Intel currently is selling at $78 per share. You buy 250 shares using $10,000 of your own money, borrowing the remainder of the purchase...
Suppose that Intel currently is selling at $78 per share. You buy 250 shares using $10,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 5%.a. What is the percentage increase in the net worth of your brokerage account if the price of Intel immediately changes to: (i) $84.24; (ii) $78; (iii) $71.76? (i) Percentage gain(ii) Percentage gain(iii) Percentage gainb. If the maintenance margin is 25%, how low can Intel’s price fall before you get a margin call? Margin call will be made at price $ or lower c. How would your answer to part (b) would change if you had financed the initial purchase with only $9,750 of your own money? Margin call will be made at price $ or lower d. What is the rate of return on your margined position (assuming again that you invest $10,000 of your own money) if Intel is selling after 1 year at: (i) $84.24; (ii) $78; (iii) $71.76? (i) Rate of return %(ii) Rate of return %(iii) Rate of return$e. Continue to assume that a year has passed. How low can Intel’s price fall before you get a margin call? Margin call will be made at price $ or lower