Suppose the call money rate is 6.8 percent, and you pay a spread of 1.9 percent over that. You buy 700 shares at $61 per share with an initial margin of 65 percent. One year later, the stock is selling for $66 per share and you close out your position. What is your return assuming no dividends are paid? Rate of Return = ?

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
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Suppose the call money rate 6.8
percent, and you pay a spread of 1.9
percent over that. You buy 700 shares
at $61 per share with an initial margin
of 65 percent. One year later, the
stock is selling for $66 per share and
you close out your position. What is
your return assuming no dividends
are paid? Rate of Return = ?
Transcribed Image Text:Suppose the call money rate 6.8 percent, and you pay a spread of 1.9 percent over that. You buy 700 shares at $61 per share with an initial margin of 65 percent. One year later, the stock is selling for $66 per share and you close out your position. What is your return assuming no dividends are paid? Rate of Return = ?
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