You pald cash for $800 worth of stock a year ago. Today the portfolio is worth $1,150. 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 55%. 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 $750 today. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) 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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You pald cash for $800 worth of stock a year ago. Today the portfolio is worth $1,150.
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 55%. 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 $750 today. (Negative volue 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 $750 today. (Negative value should be
Indicated by a minus sign. Round your answer to 2 decimal places.)
Rate of return
Transcribed Image Text:You pald cash for $800 worth of stock a year ago. Today the portfolio is worth $1,150. 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 55%. 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 $750 today. (Negative volue 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 $750 today. (Negative value should be Indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return
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