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A year ago, Kim Altman purchased 150 shares of BLK, Inc. for $37.00 on margin. At...

A year ago, Kim Altman purchased 150 shares of BLK, Inc. for $37.00 on margin. At that time the margin requirement was 60 percent. If the interest rate on borrowed funds was 11 percent and she sold the stock for $46.50, what is the percentage return on the funds she invested in the stock? Round your answer to two decimal places.

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Answer #1

Cost of the shares purchased = 150 × 37 = 5550

Margin Amount = 5550.00 × 0.6 = 3330

Funds borrowed = 5550 - 3330 = 2220

Interest paid = 2220 × 0.11 = 244.2

Profit on the stock = Selling Price - Buying Price

Selling Price = 46.5 * 150 = 6975

Profit on the stock = 6975 - 5550 = 1425

Return = ( Profit - Interest) / Margin

Return on the investment: (1425 - 244.2)/ 3330 = 35.46% Answer

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