You purchased 250 shares of common stock on margin for $25 per share. Theinitial margin is 80%, and the stock pays no dividend. Your rate of return would beif you sell the stock at $32 per share. Ignore interest on margin.O 43%O 28%39%O 35%

The rate of return that an investor is expected to earn from the investment is termed as the…

Answered: You purchased 250 shares of common…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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am. 104.
Suppose the call money rate is 4.5 percent, and you pay a spread of 2.5 percent over that. You buy 700 shares of stock at $61 per share. You put up $27,755. One year later, the stock is selling for $75 per share and you close out your position. What is your return assuming a dividend of $0.90 per share is paid?
You have a margin account and deposit Rs.90,000. Assuming the prevailing marginrequirement is 20%, commissions are ignored and D.G.K Cement stock is selling atRs.55 per share while Askari Cement stock is selling at Rs. 85 per share. You invest 40%of your investment in D.G.K cement while remaining is deposited in Askari cement.a. How many shares of each stock can you purchase using the maximum allowablemargin if you invest in both?b. What is your total and percentage profit (loss) if:1. the price of D.G.K Cement Rises to Rs.65 per share while Askari Cement stockrises to Rs. 97 per share?2. the price of D.G.K Cement reduces to Rs.42 per share while Askari Cementstock reduces to Rs. 76 per share?c. If you invest all money in D.G.K cement ONLY and the maintenance margin is 25%,to what price can D.G.K Cement stock fall before you will receive a margin call?d. If you invest all money in Askari cement ONLY and the maintenance margin is 25%,to what price can Askari cement stock fall before you…
A stock does not currently pay a dividend, but you expect to sell the stock for $41 in 3 years. The required return is 6%. What is the value of the stock?
You sold short 200 shares of common stock at $60 per share. The initial margin is 65%. What would your rate of return be if you repurchase the stock at $80 per share. Ignore interest on the margin.
A stock does not currently pay a dividend, but you expect to sell the stock for $73 in 4 years. The required return is 7%. What is the value of the stock?
Manshukh

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You purchased 250 shares of common stock on margin for $25 per share. The initial margin is 80%, and the stock pays no dividend. Your rate of return would be if you sell the stock at $32 per share. Ignore interest on margin. 43% 28% 39% 35%