Question

poed c. Redo parts (a) and (b), but now assume that Xtel also has paid a year-end dividend of $2 per share. The prices in part (a) should be interpreted as ex dividend, that is, prices after the dividend has been paid. (Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) Prim Rate of return 1. Rate of retum Rate of retum Margin cal will be made at price or higher

Answer 1

a. i. Rate of return = ( -3) * 400 / 8000 = - 15%

ii. Rate of return = (0) *400 / 8000 = 0%

iii. Rate of return = ( 3) *400 / 8000 = 15%

b. Investment = 400 * 40 + 8000 = 24000

Margin call :-

0.25 = (24,000 - 400P ) / 400P

P = 48

c. i. Rate of return = [( -3 * 400) -(400*2)] / 8000 = - 25%

ii. Rate of return = [(0 * 400) -(400*2)] / 8000 = -10%

iii. Rate of return = [(3 * 400) -(400*2)] / 8000 = 5%

Margin call :-

0.25 = (23200 - 400P ) / 400P

P = 46.4