Stella plans to purchase 100 shares of a stock (ticker: HOOD) that is currently trading at $72 per share. She plans to get a call loan of $4,000 from her long-time broker. Her broker will charge 2.74% interest on the loan regardless of the length of the loan. If the stock increases by $10 over the next year, what is the return on her investment for the year? Assume she pays the interest when she returns the loan. Round your answer to two decimal places. Use a detailed explanation without excel. A. 13.89% B. 14.67% C. 16.67% D. 27.83% E. 31.25%
Stella plans to purchase 100 shares of a stock (ticker: HOOD) that is currently trading at $72 per share. She plans to get a call loan of $4,000 from her long-time broker. Her broker will charge 2.74% interest on the loan regardless of the length of the loan. If the stock increases by $10 over the next year, what is the return on her investment for the year? Assume she pays the interest when she returns the loan. Round your answer to two decimal places. Use a detailed explanation without excel. A. 13.89% B. 14.67% C. 16.67% D. 27.83% E. 31.25%
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
Related questions
Question
Stella plans to purchase 100 shares of a stock (ticker: HOOD) that is currently
trading at $72 per share. She plans to get a call loan of $4,000 from her long-time broker. Her
broker will charge 2.74% interest on the loan regardless of the length of the loan. If the stock
increases by $10 over the next year, what is the
Assume she pays the interest when she returns the loan. Round your answer to two decimal
places.
Use a detailed explanation without excel.
A. 13.89%
B. 14.67%
C. 16.67%
D. 27.83%
E. 31.25%
Expert Solution
Step 1: Given
Stella plans to purchase 100 shares at $72 per share
She also takes a call loan of $4,000
The broker charges 2.74% interest on the $4,000 loan
Step by step
Solved in 3 steps with 1 images
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