Felicity Hamilton wants to buy 300 shares of General Electric, which is currently selling in the market
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Felicity Hamilton wants to buy 300 shares of General Electric, which is currently selling in the market for $12.32 a share. Rather than liquidate all her savings, she decides to borrow through her broker. Assume that the margin requirement on common stock is 50%. If the stock rises to $17.50 a share by the end of the year, show the dollar profit and percentage return that Felicity would earn if she makes the investment with 50% margin. Contrast these figures to what she’d make if she uses no margin.
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Related Book For
Personal Financial Planning
ISBN: 9781439044476
12th Edition
Authors: Lawrence J. Gitman, Michael D. Joehnk, Randy Billingsley
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