You paid cash for $1,600 worth of stock a year ago. Today the portfolio is worth $2,626. a. What rate of return did you earn on the investment? (Negative value should be indicated by minus sign. Round your answer to 2 decimal places.) Rate of return % b. Now suppose that you bought the same stock but bought it on margin. The initial margin requirement was 65%. Recalculate your rate of return, ignoring any interest due. (Negative valu should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return % c. Recalculate the rates of return for a cash purchase in the event that the stock is worth $825 today. (Negative value should be indicated by a minus sign. Round your answer to 2 decin places.)
You paid cash for $1,600 worth of stock a year ago. Today the portfolio is worth $2,626. a. What rate of return did you earn on the investment? (Negative value should be indicated by minus sign. Round your answer to 2 decimal places.) Rate of return % b. Now suppose that you bought the same stock but bought it on margin. The initial margin requirement was 65%. Recalculate your rate of return, ignoring any interest due. (Negative valu should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return % c. Recalculate the rates of return for a cash purchase in the event that the stock is worth $825 today. (Negative value should be indicated by a minus sign. Round your answer to 2 decin places.)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 13P
Related questions
Question
![You paid cash for $1,600 worth of stock a year ago. Today the portfolio is worth $2,626.
a. What rate of return did you earn on the investment? (Negative value should be indicated by a
minus sign. Round your answer to 2 decimal places.)
Rate of return
%
b. Now suppose that you bought the same stock but bought it on margin. The initial margin
requirement was 65%. Recalculate your rate of return, ignoring any interest due. (Negative value
should be indicated by a minus sign. Round your answer to 2 decimal places.)
Rate of return
%
c. Recalculate the rates of return for a cash purchase in the event that the stock is worth $825
today. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal
places.)
Rate of return
%
d. Recalculate the rates of return for a margin purchase in the event that the stock is worth $825
today. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal
places.)
Rate of return
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff14be19c-196e-450d-9159-37f0b1fb6a89%2F66730469-8dcd-497d-856b-a40612a63d9a%2F9ytyi49_processed.png&w=3840&q=75)
Transcribed Image Text:You paid cash for $1,600 worth of stock a year ago. Today the portfolio is worth $2,626.
a. What rate of return did you earn on the investment? (Negative value should be indicated by a
minus sign. Round your answer to 2 decimal places.)
Rate of return
%
b. Now suppose that you bought the same stock but bought it on margin. The initial margin
requirement was 65%. Recalculate your rate of return, ignoring any interest due. (Negative value
should be indicated by a minus sign. Round your answer to 2 decimal places.)
Rate of return
%
c. Recalculate the rates of return for a cash purchase in the event that the stock is worth $825
today. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal
places.)
Rate of return
%
d. Recalculate the rates of return for a margin purchase in the event that the stock is worth $825
today. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal
places.)
Rate of return
%
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