For stocks, the typical lot size is 100 shares.
Price of Stock (RM) | 3.5 |
No. of shares | 2000 |
Market Value of equity (RM) | 7000 |
Margin requirement | 70% |
Own funds (RM) | 4900 |
Loan amount (RM) | 2100 |
GAINS FROM THE TRADE
If the share price rises to RM8.00 after one year, then the value of the stock increases to RM16,000.
Capital gains = (16,000 - 4,900) = RM 11,100
Dividend received = RM 0.50*2000 = RM 1,000
EXPENSES FROM THE TRADE
By the end of the year, the amount of the loan owed to the broker grows to: Principal * (1 + Interest rate) = RM2,100 * (1 + 0.08) = RM2,268
Transaction fees = 1.50%*trade value = 1.50%*RM 7000 = RM 105
Net gain = 11,100 + 1,000 - 2,268 - 105 = RM 9,727
Rate of return on investment = Net gain/Invested own funds = RM 9,727 / RM 4,900 - 1 = 98.51%
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