Question: You have $30,000 in a margin account, 60% initial margin required. Suppose you buy 600 shares of IBM, for $50/share. Assume no dividends, and that

You have $30,000 in a margin account, 60% initial margin required. Suppose you buy 600 shares of IBM, for $50/share. Assume no dividends, and that your borrowing rate is 6.1%. What is your percentage return if you did not borrow from your broker and if, in one year, IBM stock is selling for $43 per share?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

You have $30,000 in a margin account, 60% initial margin required. Suppose you buy 600 shares of IBM, for $50/share. Assume no dividends, and that your borrowing rate is 5.6%. What is your return if...

Question 3 1 points You have $30,000 in a margin account, 60% initial margin required. Suppose you buy 600 shares of IBM, for $50/share. Assume no dividends, and that your bomowing raas 50% What is...

You have $30,000 in a margin account, 60% initial margin required. Suppose you buy 1,000 shares of IBM, for $50/share. Assume no dividends, and that your borrowing rate is 6.1%. What is your return...

You have $30,000 in a margin account, 60% initial margin required. Suppose you buy 1,000 shares of IBM, for $50/share. Assume no dividends, and that your borrowing rate is 6.4%. What is your...

You have $30,000 in a margin account, 60% initial margin required. Suppose you buy 1,000 shares of IBM, for $50/share. Assume no dividends, and that your borrowing rate is 5.6%. What is your...

You have $30,000 in a margin account, 60% initial margin required. Suppose you buy 1,000 shares of IBM, for $50/share. Assume no dividends, and that your borrowing rate is 6.2%. What is your...

1 points You have $30,000 in a margin account, 60% initial margin required. Suppose you buy 1.000 shares of IBM, for $50/share. Assume no dividends, and that your bonowing rate is 6.0% What is your...

investement - You have $30,000 in a margin account; 60% initial margn required. - You can buy $50,000 of stock with this account (why?). - Your borrowing rate from your broker is 6.00%. - Suppose you...

Example:The Effects of Margin, I. You haye $ 3 0 , 0 0 0 in a margin account; 6 0 % initial margin required. You can buy $ 5 0 , 0 0 0 of stock with this account ( why ? ) . Your borrowing rate from...

Suppose that Xtel currently is selling at $30 per share. You buy 600 shares using $13,500 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin...

5-Star Adventures Inc. financed its $1,000,000 expansion by issuing on January 1, 2014, a 5%, 10-year bond dated the same day with annual interest payments to be made each December 31. The market...

What general kind of reaction does NAD+ carry out?

3. What type of mutual fund investment program would you set up for Marge? In your answer, discuss the types of funds youd consider, the investment objectives youd set, and any investment services...

The states the overall purpose of the NAR Code of Ethics. It lets all who read it know what the public, customers, clients, and other REALTORS should expect from REALTORS . Case interpretations Case...

Select a person you know who is consistently passive. Do people take advantage of this person, such as getting them to do more work? Do you? Is it ethical to take advantage of passive people?

Select a person you know who is consistently assertive. Do people tend to respect this person, and does this person have effective human relations? Do you have effective human relations? What will...

Many have argued that traditional organizational hierarchies structure conflict. Using transactional analysis, explain Jobss ego state and how that may have created his seemingly split personality...