600 shares are purchased on the margin at the beginning of the year for $40 per share....
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Question:
600 shares are purchased on the margin at the beginning of the year for $40 per share. The initial margin requirement was 55%. Interest of 10% was paid on the margin loan and no margin call was ever faced. A dividend of $2 per share is received.
Calculate the annual return if:
The stock are sold for $45 per share at the end of the year.
If the stock are sold for $25 per share at the end of the year.
Calculate the return for (a) and (b) if the purchase had been made using cash instead of on the margin.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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