On 1 June, shares in Blue.com traded at $40.82. Your broker allowed you to buy the shares on margin with an initial margin of 60.00%. You bought as many shares as you could. The broker charged you no interest on the account. Now, Blue.com shares trade at $37.40. What was your holding period return from 1 June to today? -8.38% -13.41% -5.03% -13.96%
On 1 June, shares in Blue.com traded at $40.82. Your broker allowed you to buy the shares on margin with an initial margin of 60.00%. You bought as many shares as you could. The broker charged you no interest on the account. Now, Blue.com shares trade at $37.40. What was your holding period return from 1 June to today? -8.38% -13.41% -5.03% -13.96%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
On 1 June, shares in Blue.com traded at $40.82. Your broker allowed you to buy the shares on margin with an initial margin of 60.00%. You bought as many shares as you could. The broker charged you no interest on the account. Now, Blue.com shares trade at $37.40. What was your holding period return from 1 June to today?
-8.38% |
||
-13.41% |
||
-5.03% |
||
-13.96% |
Expert Solution
Step 1
Given:
Purchase price = $40.82
Closing price = $37.40
Initial margin = 60%
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