An investor buys 200 shares of stock selling at $80 per share using a margin of 60%. The stock pays annual dividends of $1 per share. A margin loan can be obtained at an annual interest cost of 8%. Determine what return on invested capital the investor will realize if the price of the stock increases to $104 within 6 months. What is the annualized rate of return on this transaction?
Answer to relevant QuestionsMarlene Bellamy purchased 300 shares of Writeline Communications stock at $55 per share using the prevailing minimum initial margin requirement of 50%. She held the stock for exactly 4 months and sold it without brokerage ...Calculate the profit or loss per share realized on each of the following short-sale transactions. a. Evaluate each of these alternatives. On the basis of the limited information presented, recommend the one you feel is best. b. If Casinos International's stock price rises to $60, what will happen under alternatives 2 and ...Differentiate among market orders, limit orders, and stop-loss orders. What is the rationale for using a stop-loss order rather than a limit order? Differentiate between descriptive information and analytical information. How might one logically assess whether the acquisition of investment information or advice is economically justified?
Post your question