An investor buys 300 shares of stock selling at $65 per share using a margin of 70%.
Question:
An investor buys 300 shares of stock selling at $65 per share using a margin of 70%. The stock pays annual dividends of $2 per share. A margin loan can be obtained at an annual interest cost of 4%. Determine what return on invested capital the investor will realize if the price of the stock increases to $84 within six months. What is the annualized rate of return on this transaction?
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Related Book For 
Fundamentals Of Investing
ISBN: 9780135175217
14th Edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
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