Suppose you buy a round lot of Francesca Industries stock (100 shares) on 50 percent margin when the stock is selling at $30 a share. The broker charges a 8 percent annual interest rate, and commissions are 2 percent of the stock value on the purchase and sale. A year later you receive a $0.40 per share dividend and sell the stock for $38 a share. What is your rate of return on Francesca Industries? Do not round intermediate calculations. Round your answer to two decimal places.

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 you buy a round lot of Francesca Industries stock (100 shares) on 50 percent margin when the stock is selling at $30 a share. The broker charges a 8
percent annual interest rate, and commissions are 2 percent of the stock value on the purchase and sale. A year later you receive a $0.40 per share dividend and
sell the stock for $38 a share. What is your rate of return on Francesca Industries? Do not round intermediate calculations. Round your answer to two decimal
places.
%
Transcribed Image Text:Suppose you buy a round lot of Francesca Industries stock (100 shares) on 50 percent margin when the stock is selling at $30 a share. The broker charges a 8 percent annual interest rate, and commissions are 2 percent of the stock value on the purchase and sale. A year later you receive a $0.40 per share dividend and sell the stock for $38 a share. What is your rate of return on Francesca Industries? Do not round intermediate calculations. Round your answer to two decimal places. %
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