Question

An investor buys 300 shares of stock selling at $88 per share using a margin of 61%. The stock pays annual dividends of $ 1.00 per share. A margin loan can be obtained at an annual interest cost of 8.9%. Determine what return on invested capital the investor will realize if the price of the stock increases to $108 within six months.

If the price of the stock increases to$108 within six months, the six-month return on this transaction is________% (Round to two decimal places.)

What is the annualized rate of return on this transaction?

Answer #1

An investor buys
300
shares of stock selling at
$93
per share using a margin of
58%.
The stock pays annual dividends of
$2.00
per share. A margin loan can be obtained at an annual interest
cost of
7.3%.
Determine what return on invested capital the investor will
realize if the price of the stock increases to $102
within six months.
What is the annualized rate of return on this transaction?

An investor buys 300 shares of stock selling at $110 per share
using a 60% initial margin and a 30% maintenance margin. The stock
does not pay a dividend. A margin loan can be obtained at an annual
interest rate of 5%. What is the annualized return on invested
capital if the stock price gradually increases to $124 at the end
of one year? (include the interest on the margin loan.)
Annualized rate of return =
_________________________%

Lisa Lasher buys 400 shares of stock on margin at $28 per share.
If the margin requirement is 50 percent, how much must the stock
rise for her to realize a 10-percent return on her invested
funds?

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.

An investor long purchases 300 shares of a stock for $39 per
share on margin. The price decreases to $32 after 6 months. The
initial margin is 50% and the maintenance margin is 35%. Will there
be a margin call? Assume there are no other securities in the
account.
a. No because the current margin is 39%
b. yes because current margin is 32%
c. yes because the current margin is 39%
d. no because the current margin is 44%

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?

An investor buys $8,000 worth of a stock priced at $40 per share
using 55% initial margin three months ago. The broker charges 5.5%
per annum on the margin loan and requires a 33% maintenance margin.
The dividend yield of the stock is 0.5% per annum and is paid in
every three year. The stock is sold at $42 per share. What was the
investor's rate of return?

An investor purchased 300 shares of a company at $25 per share.
The stock was bought on 70 percent margin (30 percent of the
purchase amount was borrowed). One month later, the investor had to
pay interest on the amount borrowed at a rate of 3 percent per
month. At that time, the investor received a dividend of $0.6 per
share. Immediately after receiving the dividend, he sold the shares
at $38 per share. The investor paid total commissions of...

An investor buys $16,000 worth of a stock priced at $20
per share using 60% initial margin. The broker charges 8% on the
margin loan and requires a 35% maintenance margin. If the stock is
sold at $23 per share in one year, what was the investor’s rate of
return?
Input your answer as a percentage with 2 decimal places,
without the %. For example, 20.27.

An investor buys Bank of America (BAC) shares at $20 per share
using $60,000 of his own money. Without using a margin loan, he can
buy 3,000 shares, using 60% initial margin loan he can buy 5,000
shares. Calculate his return on his initial investment ($60,000) in
the two cases no margin and with margin purchase.
A. Price is $24
b. Price is $18
c.A second investor shorted 1,000 shares of BAC at the $20
price.

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