Question

You buy $5,500 worth of stock using margin. The margin requirement is 60% and the maintenance...

You buy $5,500 worth of stock using margin. The margin requirement is 60% and the maintenance margin is 30%. Commissions are 2%. You hold the stock for one year during which you receive a $500 dividend. Interest on borrowed funds is 10%. You are able to sell the stock for $6,000. What is your percent return?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

According to given data ,the following data is given as below :

expense by personal funds = 5500x60% + 5500x2% = 3410

mortgage = 5500x40% = 2200

Interest = 220

specifications cash
Sale outlay           5,880.00
Least: investment         (3,410.00)
Least: mortgage expenses         (2,420.00)
Add: dividends              500.00
Dollar reSTORING              550.00
personanal investment           3,410.00
RoI 16.1290%

SOLUTION is:

16.1290% .

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You buy $5,500 worth of stock using margin. The margin requirement is 60% and the maintenance...
You buy $5,500 worth of stock using margin. The margin requirement is 60% and the maintenance margin is 30%. Commissions are 2%. You hold the stock for one year during which you receive a $500 dividend. Interest on borrowed funds is 10%. You are able to sell the stock for $6,000. What is your percent return?
Suppose that you opened a margin account (margin requirement = 60%) with your brokerage firm. Through...
Suppose that you opened a margin account (margin requirement = 60%) with your brokerage firm. Through this account, you invested in 100 shares of Mercer Inc. stocks at $80 per share two years ago. While you hold the stocks (2 years = 8 quarters), the firm paid out $1.00 dividend per share every quarter. If you sell the stocks at $90 per share today, what is the percentage return for your investment? Assume that the commission rate is 5 percent...
Lisa Lasher buys 420 shares of stock on margin at $25 per share. If the margin...
Lisa Lasher buys 420 shares of stock on margin at $25 per share. If the margin requirement is 40 percent, how much must the stock rise for her to realize a 30-percent return on her invested funds? (Ignore dividends, commissions, and interest on borrowed funds.) Round your answer to the nearest cent.
You buy 5000 shares of stock at a price of k380 and an initial margin of...
You buy 5000 shares of stock at a price of k380 and an initial margin of 60%. if the maintenance margin is 30%. Required: (i). At what price will you receive a margin call? [8marks] (ii). Calculate your return should you sell the shares at k400 per share [6marks]
You short-sell 50 shares of XYZ stock at $100 per share. Your broker's initial margin requirement...
You short-sell 50 shares of XYZ stock at $100 per share. Your broker's initial margin requirement is 50% of the value of your short position. You put up cash to satisfy the initial margin requirement. a) What will be your rate of return (after 1 year) if XYZ stock sells at $110 a share? Assume that you do not earn any interest on your funds in the margin account and that the stock pays a dividend of $1.50 a share...
Suppose you buy a round lot of Francesca Industries stock (100 shares) on 55 percent margin...
Suppose you buy a round lot of Francesca Industries stock (100 shares) on 55 percent margin when the stock is selling at $30 a share. The broker charges a 12 percent annual interest rate, and commissions are 2 percent of the stock value on the purchase and sale. A year later you receive a $0.65 per share dividend and sell the stock for $41 a share. What is your rate of return on Francesca Industries? Do not round intermediate calculations....
You purchased 800 shares of stock for $49.20 a share. The initial margin requirement is 65...
You purchased 800 shares of stock for $49.20 a share. The initial margin requirement is 65 percent and the maintenance margin is 35 percent. What is the lowest the stock price can go before you receive a margin call? What is your return if price per share goes up to $60 (assume no interest)? $9.27; 40% $26.49; 25.67% $17.22; 50% $26.49; 33.77%
If we buy stock worth $1 million, and the initial margin requirements are 50%, while the...
If we buy stock worth $1 million, and the initial margin requirements are 50%, while the maintenance margin requirement is 30%, what happens if the stock value drops by 45%?
You short sell 1000 shares of Internet Dreams. The initial margin requirement is 50%. A year...
You short sell 1000 shares of Internet Dreams. The initial margin requirement is 50%. A year later, the price has risen up from $40 to $50 and the stock has paid a dividend of $3.   a) What is the remaining margin on the account? b) If the maintenance margin requirement is 30%, will you receive a margin call? c) What is the rate of return on this investment?
An investor buys $10,000 worth of stock priced at $40 per share using 60% initial margin....
An investor buys $10,000 worth of stock priced at $40 per share using 60% initial margin. The broker charges 10% on the margin loan and requires a 35% maintenance margin. The stock pays $2.00-per share dividend in 1 year, and then the stock is sold at $50 per share. What was the investors rate of return?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT