Consider the three stocks in the following table. Pt represents the price at the

Consider the three stocks in the following table. Pt represents the price at the end of period t and Qt is the number of shares outstanding. Stock C splits 2:1 during period 2.2.A. The current market price for XYZ is $45 per share. Initial margin is 50%, maintenance margin is 35% and margin interest is 1.25% per year.2.A.1) You believe the stock price will increase over the next year and wish to trade exactly one round lot. What trade should you make (2 points)? How much margin would you have to post to your account (4 points)? At what price would you receive a margin call (7 points)?2.A.2) Suppose you are correct and the stock rises to $52 per share at the end of the year. What is your percentage return on equity for this trade (4 points)?2.B. The current market price for ABC is $45 per share. Initial margin is 50%, maintenance margin is 35% and there is no margin interest.2.B.1) You believe the stock price will decrease over the next year and wish to trade exactly one round lot. What trade should you make (2 points)? How much margin would you have to post to your account (4 points)? At what price would you receive a margin call (7 points)?2.B.2) Suppose you are correct and the stock falls to $35 per share at the end of the year. What is your percentage return on equity for this trade (4 points)?Problem 3 Scenario Analysis (33 points)Use the following scenario analysis for stocks X and Y to answer the questions. Round to the nearest 1/100 of 1% (i.e., 15.07%).

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