FHCE 4200 Lecture 2: Wealth Management 4200

• School: University of Georgia
• Department: Financial Planning, Housing and Consumer Economics
• Course: FHCE 4200
• Professor: C H A T T E R G E E

Document Summary

When we are borrowing money to invest (long) When we are buying stocks from someone and selling them in the market, expect security price to go down (short) Know difference between long trading and short trading positions. You are sure it is going to go up in value. End up buying ,000 worth of stocks at this price. (2312 shares) Total value of your investments is now: ,231. And you can sell these shares and return 2,000 borrowed. If we had come up with 4,000 of our own money instead of borrowing. Borrowing is the margin, which reduces original investment. =1% interest charge assumed. (because 1% is off the 2,000 borrowed) With leverage you almost double your percent return.