You purchase 1,000 shares MSFT stock on margin at a price of $150/share. The margin rate is 5% continuously compounded. The margin loan is $50,000. You want to analyze your potential returns under three scenarios for MSFT’s stock price over the next year:
i) $120/share
ii) $150/share
iii) $180/share
Fill in the table below to show your work.
Current Value |
MSFT Stock Price 1-year Later |
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$120/share |
$150/share |
$180/share |
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Asset |
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Margin Loan |
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Equity |
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% Return |
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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE
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