Margin Purchases Suppose you have a margin account with TD Ameritrade. You purchase 1,000 shares of IBM

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Margin Purchases Suppose you have a margin account with TD Ameritrade. You purchase 1,000 shares of IBM stock on 50 percent margin at today’s price. Go to finance.yahoo.com to find your purchase price. Ignoring transaction costs, how much will you borrow? Next, go to bankrate.

com to find the current broker call money rate. Finally, go to TDAmeritrade.com to find out how much above the current broker call money rate you will pay. If you keep your investment for one year, how much will you pay in interest assuming the margin rate stays the same? What does the stock price have to be in one year for you to break even on your investment?

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