Question

If a stock is initially priced at $60, and pays an annual $2 dividend. An investor...

If a stock is initially priced at $60, and pays an annual $2 dividend. An investor uses cash to pay $35 a share and borrows the remaining funds at a 12 percent annual interest. What is the return if the investor sells the stock for $59 at the end of one year?

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Answer #1
Particulars Amount
Sale price                59.00
Less: investment               (35.00)
Less: loan payment               (28.00)
Add: dividends                   2.00
Dollar return                 (2.00)
/ own investment                35.00
Return on investment -5.7143%

Answer is:

-5.7143%

please rate.

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