You've just opened a margin account with $27,755 at your local brokerage firm. You instruct your broker to purchase 700 shares ofLandon Golf stock, which currently sells for $61 per share. Suppose the call money rate is 5.5 percent and your broker charges you aspread of 1.25 percent over this rate. You hold the stock for three months (or 90 days) and sell at a price of $67 per share. Thecompany paid a dividend of $0.52 per share the day before you sold your stock.a. What is your total dollar return from this investment?Note: Do not round intermediate calculations. Round your answer to 2 decimal places.Dollar returnb. What is your effective annual rate of return?Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.Effective annual return78.32 %

The dollar returns on the stock investment will be the sum of capital gains due to the appreciation…

Answered: You've just opened a margin account…

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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Use the commission schedule from Company A shown in the table to find the annual rate of interest earned on the investment. (Note: commissions are rounded to the nearest cent.) An investor purchases 250 shares at $11.21 a share, holds the stock for 37 weeks, and then sells the stock for $13.65 a share. The annual rate is %. (Round to five decimal places.) Principal (Value of Stock) Under $3,000 $3,000 to $10,000 Over $10,000 Commission $25+1.8% of principal $37+1.4% of principal $107+0.7% of principal
Answer the following problems with a complete solution. a. Find the 5% commission on the total sales of P20,000.00 b. You bought 20 shares at P750.00 per share. The broker charged her a P150.00 commission. Find the cost of the stock.c. You own 105 shares, par value P200.00. If the corporation declares an 8% dividend, what is the total dividend that should get? d. You bought ten P750.00 bonds at 315 plus a 6% brokerage fee. Find the investment.
An investor buys $17 thousand dollars of ABT stock at $20 per share, using 58% initial margin. The broker charges 6% APR compounded daily on the loan, and requires a 35% maintenance margin. The stock pays $0.85 per share dividend each year. If the stock is sold at the end of the year at $21 per share, what is the investor's rate of return?
Two years ago, you purchased 100 shares of General Mills Corporation. Your purchase price was $61 a share, plus a total commission of $38 to purchase the stock. During the last two years, you have received total dividends of $2.48 per share. Also, assume that at the end of two years, you sold your General Mills stock for $66 a share minus a total commission of $36 to sell the stock. Calculate the total return for your investment and the annualized holding period yield. O Total return on the investment: $574. Annualized holding period yield: 4.70%. O Total return on the investment: $674. Annualized holding period yield: 5.52%. O Total return on the investment: $774. Annualized holding period yield: 6.34%. O Total return on the investment: $874. Annualized holding period yield: 7.16%.
You purchase 2,000 shares of Nice Kick Group (NKG) at $45 per share by giving your broker $60,000 to establish your margin account and borrowing the rest from your broker. A year has passed (t=1), and NKG paid out a dividend of $2 per share. The maintenance margin is 25%. If you paid an interest at a rate of 8% on the funds you borrowed from your broker, what is the NKG price at which would trigger a margin call? A. $60.94 B. $36.25 C. $71.07 D. $18.93
You purchase 110 shares for $40 a share ($4,400), and after a year the price falls to $35. Calculate the percentage return on your investment if you bought the stock on margin and the margin requirement was (ignore commissions, dividends, and interest expense): 15 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. % 50 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. % 75 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. %
A stock is selling for $83 per share. One-month European calls and puts on the stock with the strike price of $80 are selling for $6 and $3, respectively. Kevin creates a straddle by buying 100 calls and 100 puts. What is his net profit if the stock price is $85 one month later? O A loss of $600 O A gain of $400 O A loss of $400 O A loss of $900
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…
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1) Andy is bearish on USL and decides to sell short 20, 000 shares at the current market price of $120 per shar e. The initial margin is 50%. The margin account pays n o interest. Three days later, the price of USL has risen t o $130. a. What is the remaining margin in the account? b. If the maintenance margin is 30%, will Andy receive a margin call? c. Calculate the rate of return on the short position.

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