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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?

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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% .

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