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X Company's stock is selling for $40 and you've decided to purchase as many shares as you possibly can. You have $12,000 available to invest. The initial margin requirement on your account is 60 percent

X Company's stock is selling for $40 and you've decided to purchase as many shares as you possibly can. You have $12,000 available to invest. The initial margin requirement on your account is 60 percent

Essentials Of Investments
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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X Company's stock is selling for $40 and you've decided to purchase as many shares as you possibly can. You have $12,000 available to invest. The initial margin requirement on your account is 60 percent and the maintenance margin is 35 percent. The call money rate is 4.9 percent and you pay 1.8 percent above that rate. You hold the stock for 5 months and sell at a price of $42 per share. The company paid a dividend of $.5 per share the day before you sold your stock. Please show the T-accounts before and after the price change What is your effective annual rate of return?
Transcribed Image Text:X Company's stock is selling for $40 and you've decided to purchase as many shares as you possibly can. You have $12,000 available to invest. The initial margin requirement on your account is 60 percent and the maintenance margin is 35 percent. The call money rate is 4.9 percent and you pay 1.8 percent above that rate. You hold the stock for 5 months and sell at a price of $42 per share. The company paid a dividend of $.5 per share the day before you sold your stock. Please show the T-accounts before and after the price change What is your effective annual rate of return?
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