Junxu decides to buy on margin 41 shares of PSB, which are selling for $44 per share. The maximum initial loan to value (LTV) is 45%, and you will get a margin call if the LTV rises to 80%. Junxu decides to use the maximum leverage possible (i.e. maximum initial LTV). The interest rate on the loan is an APR of 8% with a daily compounding period. If after exactly 11 days the stock price rises to $81.85 and Junxu sells the stock, which answer below is closest to Junxu's holding period return? For simplicity, please ignore transaction costs.

Answer rating: 100% (QA)

To calculate Junxus holding period return we need to first calculate the initial margin requirement ... View the full answer