Assume that you buy 100 shares of Francesca Industries stock on 55 percent margin when the stock

Question:

Assume that you buy 100 shares of Francesca Industries stock on 55 percent margin when the stock is selling at $20 a share. The broker charges a 5 percent annual interest rate, and commissions are 2 percent of the stock value on the purchase and sale. A year later you receive a $0.50 per share dividend and sell the stock for $27 a share. What is your rate of return on Francesca Industries?

Broker
A broker is someone or something that acts as an intermediary third party, managing transactions between two other entities. A broker is a person or company authorized to buy and sell stocks or other investments. They are the ones responsible for... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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