A You are bullish on Zhu Que, Incorporated. You invest $10,000 of your own money...
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A You are bullish on Zhu Que, Incorporated. You invest $10,000 of your own money and borrow $10,000 more from your broker (at 8 percent interest). You invest all of that in Zhu Que, Incorporated stock, buying for $100 per share. One year later, the price is now $115. Rate of Return if Price = Expected Market Price in one year Current Market Price (per share) Expected Market Price in one year Interest Rate on Loan Required Maintenance Margin Money to Invest Money to Borrow Zhu Que, Incorporated Broker Investor (Use cells A5 to B16 from the given information to complete this question.) B Buyin on Margin Number of Shares Purchased Rate of Return if Price = Expected Market Price in one year Margin Call Price $100.00 $115.00 0.08 0.3 $10,000 $10,000 n D Required: Using the tables above, solve for the number of shares the investor can purchase, the rate of return if the price rises to the expected level and the stock price at which the investor receives a margin call. E F G H
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