You are bullish on Telecom stock. The current market price is $10 per share, and you…

You are bullish on
Telecom stock. The current market price is $10 per share, and you
have $1,000 of your own to invest. You borrow an additional $1,000
from your broker at an interest rate of 8.5% per year and invest
$2,000 in the stock.

Place Order

a.
What will be your rate of return if the price of Telecom stock goes
up by 10% during the next year? (Ignore the expected dividend.)
(Round your answer to 2 decimal places.)

Rate of return
           
%

b.
How far does the price of Telecom stock have to fall for you to get
a margin call if the maintenance margin is 30%? Assume the price
fall happens immediately. (Round your answer to 2 decimal
places.)

Stock price falls
below
           $