Respuesta :
Answer:
Ans.
a) the margin in your account when you first purchase the stock is 66.67%
b) If the share price falls to $30 per share by the end of the year, the remaining margin would be 39%
c) If the share dorps to $30, the rate of return of this invesment would be -41.50%
Explanation:
Hi, your margin is the total cost of the shares minus the money you borrowed, in terms of percentage this is:
[tex]Margin=\frac{12,000-4,000}{12,000} =0.6667[/tex]
Or 66.67%
If the price goes down to $30 by the end of the year, we are going to have to take into account the interest amount, therefore this is is going to be the new margin:
[tex]Margin=\frac{30*300-4,000*1.08}{12,000} =\frac{9,000-4320}{12,000} =0.39[/tex]
The new margin is 39%
Ok, now if all this happened, this means that after 1 year, you will have to pay the loan plus its interests, that is 4,000(1+0.08)=4,320. and you sell the shares and receive 300 shares x $30 = $9,000, therefore your rate of return is:
[tex]R=\frac{(9,000-4,320)}{8,000} -1=-0.415[/tex]
8,000 is because that was the money you invested (your own) and 4,680 (9000-4320) is the money that you finally got from all this adventure. This means that your rate of return will be -41.5%
Best of luck.
