Allan purchased 500 shares of stock on margin for $31.75 a share and sold the shares five months later for $34.50 a share. The initial margin requirement was 65 percent and the maintenance margin was 30 percent. The interest rate on the margin loan was 8.5 percent. He received no dividend income. What was his holding period return?
Profit = Ending Value - Beginning Value + Dividends - Transaction Costs - Interest
Beginning Value of Investment = $31.75 x 500 shares = $15,875
Your Investment = .65 x $15,875 = $10,318.75
Ending Value of Investment = $34.50 x 500 shares = $17,250
Interest = .085 x (.35 x $15,875) = $472.28
Therefore:
Profit = $17,250 - $15,875 + $0 - $0 - $472.28 = $902.72
The rate of return on your investment of $10,318.75 is:
$902.72/$10,318.75 = 8.75%
Allan purchased 500 shares of stock on margin for $31.75 a share and sold the shares...
You purchased 1,200 shares of stock on margin for $53 per share and sold the shares 3 months later for $58.60 per share. The initial margin requirement was 55 percent and the maintenance margin was 35 percent. The interset rate on the margin loan was 8 percent. You received no dividend income. What was your holding period return?
Rudolfo purchased 900 shares of stock for $62.20 a share and sold them ten months later for $64.60 a share. The initial margin requirement on this stock is 75% and the maintenance margin is 40%. Ignoring dividends and costs, what is his holding period return?
Carry intermediate calculations to at least four decimal places unless instructed differently by the individual question. Tom purchased 482 shares of stock on margin for $28.32 a share and sold the shares 5 months later for $28.9 a share. The initial margin requirement was 64 percent and the maintenance margin was 31 percent. The interest rate on the margin loan was 9 percent. He received no dividend income. What was his holding period return (in percent)? Answer to two decimals.
1)You purchased 500 shares of stock for $28.50 a share. The initial margin requirement is 65 percent and the maintenance margin is 35 percent. What is the maximum percentage decrease that can occur in the stock price before you receive a margin call? Group of answer choices 38 percent 62 percent 57 percent 46 percent 35 percent 2)You recently purchased 200 shares of stock at a cost per share of $32.50. The initial margin requirement on this stock is 75...
Marlene Bellamy purchased 500 shares of Writeline Communications stock at $55.02 per share using the prevailing minimum initial margin requirement of 58%. She held the stock for exactly 44 months and sold it without any brokerage costs at the end of that period. During the 44-month holding period, the stock paid $1.63 per share in cash dividends. Marlene was charge 7.5% annual interest on the margin loan. The minimum maintenance margin was 25 % a. Calculate the initial value of...
16) Todd has a margin account with $17,400 in available cash. The initial margin is 70 percent and the maintenance margin is 30 percent. What is the maximum number of shares he can purchase if the price per share is $44? 17) Aaron purchased 300 shares of a technology stock for $16.80 a share. The initial margin requirement on this stock is 85 percent and the maintenance margin is 60 percent. What is the lowest the stock price can go...
Sara Sanders purchased 30 shares of Apple stock at $190.82 per share using the prevailing minimum initial margin requirement of 58%. She held the stock for exactly 6 months and sold it without any brokerage costs at the end of that period. During the 6-month holding period, the stock paid $1.49 per share in cash dividends. Sara was charged 5.4% annual interest on the margin loan. The minimum maintenance margin was 25%. a. Calculate the initial value of the transaction,...
Marlene Bellamy purchased 400 shares of Writeline Communications stock at $ 55.36 per share using the prevailing minimum initial margin requirement of 54%. She held the stock for exactly 7 months and sold it without any brokerage costs at the end of that period. During the 7-month holding period, the stock paid $ 1.64 per share in cash dividends. Marlene was charged 7.8 % annual interest on the margin loan. The minimum maintenance margin was 25%. a. Calculate the initial...
A stock was purchased for $51 a share and sold eleven months later for $54 a share. If the shares were purchased totally with cash the holding period return would be _____ percent as compared to _____ percent if the purchase was made using 70 percent margin. Ignore trading costs and margin interest. 5.56; 3.89 5.56; 7.94 5.88; 4.12 5.88; 6.69 5.88; 8.40
You purchased 100 shares of Facebook, Inc. common stock on margin at $169.25 per share. Assume the initial margin is 50% and the maintenance margin is 30%. One year later, the stock price closes at $172.58. If the broker’s call loan rate is 2.00%, what is your return on equity? Note that Facebook pays no dividends.