A trader purchases 100 shares of Omega Inc on margin for $30 per share He sells his shares after one year at $24 per share The following information is also available Dividend received on the stock $0 30 per share Commission paid $0 10 per share Leverage ratio 2 0 Call money rate 6 What is the tota...

1The return on investment Total gain on transaction 240 ...

A trader purchases 100 shares of Omega Inc. on margin for $30 per share. He sells his

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A trader purchases 100 shares of Omega Inc. on margin for $30 per share. He sells his shares after one year at $24 per share. The following information is also available:

Dividend received on the stock	$0.30 per share
Commission paid	$0.10 per share
Leverage ratio	2.0
Call money rate	6%

What is the total return on this investment?
Why is the loss greater than the 20% decrease in the market price?

Related Book For answer-question

Advanced Accounting

ISBN: 978-1118098615

5th Edition

Authors: Debra C. Jeter, Paul Chaney

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Posted Date: Dec 21, 2020 10:00 PM

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A trader purchases 100 shares of Omega Inc. on margin for $30 per share. He sells his

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