Question

An investor purchased 400 shares of a company at $30 per share. The stock was bought on 65 percent margin (35 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 $0.50 per share. Immediately after receiving the dividend, he sold the shares at $35 per share. The investor paid total commissions of $30 on the initial purchase and $40 on the final sale of the stock. What was the rate of return on this investment for the one-month period?

Answer #1

Purchase price = No. of shares * Price

= 400 * $ 30

= $ 12000

Own AMount @65% = $ 12000 * 65%

= $ 7800

Borrowed Amount @35% = $ 12000 * 35%

= $ 4200

Amount Invested = Own AMount + Commission Paid

= $ 7800 + $ 30

= $ 7830

Int on Borrowed amount = Borrowed mount * Int Rate

= $ 4200 * 3%

= $ 126

Sale Price = No. of shares * Price

= 400 * 35

= $ 14000

DIv Received = No. of shares * div per share

= 400 * 0.5

= $ 200

Net Proceeds = Sale Price + Div - Int - Sale Commision - Borrowed amount

= $ 14000 + $ 200 - $ 126 - $ 40 - 4200

= $ 9834

Rate of Ret = [ Net Proceeds / Initial Investment ] - 1

= [ $ 9834 / $ 7830 ] - 1

= 1.2559 - 1

**= 0.2559 i.e 25.59%**

An investor purchased 400 shares of a company at $30 per share.
The stock was bought on 65 percent margin (35 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 $0.50 per
share. Immediately after receiving the dividend, he sold the shares
at $35 per share. The investor paid total commissions of...

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...

*Please show work and explain*
An investor bought 100 shares of Copier Corp. for $90 a share.
The firm paid an annual dividend of $4 a share; the margin
requirement was 60 percent with an interest rate of 8 percent on
borrowed funds, and commissions on the purchase were $15 and on the
sale were another $15. The price of the stock rose to $120 in one
year.
What is the percentage return earned on the investment if the
stock...

5. An investor bought shares of stock at time 0, received annual
dividends (the last one has not been received, but is expected),
and is thinking of selling them at time 5 (after receiving the
dividend). If the investor’s time value of money is shown by the
MARR value, what selling price, per share, does the investor
expect?
Share purchase price 38.00
Time Dividends received (or expected)
dividend Investor's MARR 0.16
1 4.00
2 4.20
3 4.00
4 3.80...

) An investor is
considering buying XYZ Corp. stock on margin. His stockbroker
informed him that 100 shares of XYZ Corp. cost $42 a share. The
margin requirement was 60 percent with an interest rate of 4.5
percent on borrowed funds, and commissions on the purchase and sale
were 4%. One year after the investor invested in stock XYZ corp.
paid an annual dividend of $1.55 a share. The price of the stock
also rose to $70 in one year....

An investor is considering buying XYZ
Corp. stock on margin. His stockbroker informed him that 100 shares
of XYZ Corp. cost $42 a share. The margin requirement was 60
percent with an interest rate of 4.5 percent on borrowed funds, and
commissions on the purchase and sale were 4%. One year after the
investor invested in stock XYZ corp. paid an annual dividend of
$1.55 a share. The price of the stock also rose to $70 in one
year.
...

An investor purchased on margin Orange Computer for $30 a share.
The stock's price subsequently increased to $50 a share at which
time the investor sold the stock. If the margin requirement were 60
percent and the interest rate on borrowed funds were 7 percent,
what would be the percentage earned on the investor's funds
(excluding commissions)? What would have been the return if the
investor had not bought the stock on margin?

*Please show work and explain*
An investor bought 100 shares of Copier Corp. for $90 a share.
The firm paid an annual dividend of $4 a share and commissions on
the purchase were $15 and on the sale were another $15. The price
of the stock rose to $120 in one year.
What is the percentage return earned on the investment if the
stock is bought for cash (i.e., the investor did not use
margin)?
Show your answer in percentage...

On February 20, you bought shares of stock in Microsoft (MSFT),
at $107.15 per share. One quarter later, in mid-May, you sold your
shares at a price of $126.02/share. An instant before the sale, you
received a dividend of $0.46/share.1 a. (i) Compute the total (or
holding period) percentage return on your investment. (ii)
Translate the quarterly return from part a(i) into an effective
annual return. // Total return can be decomposed into two
components. b. Calculate the dividend yield....

An investor purchased 200 shares of XYZ stock at $25 per share,
plus a $300 brokerage commission. He then sold 100 shares of the
XYZ stock at $35 per share, paying a $200 commission on the sale.
He will record a
A) $1,000 gain on the sale of the investment.
B) $500 gain on the sale of the investment.
C) $650 gain on the sale of the investment.
D) $850 gain on the sale of the investment.

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 2 minutes ago

asked 9 minutes ago

asked 9 minutes ago

asked 10 minutes ago

asked 10 minutes ago

asked 10 minutes ago

asked 12 minutes ago

asked 12 minutes ago

asked 14 minutes ago

asked 14 minutes ago

asked 17 minutes ago