A trader has purchased 200 shares of a non-dividend-paying firm on margin at a price of $50
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A trader has purchased 200 shares of a non-dividend-paying firm on margin at a price of $50 per share. The leverage ratio is 2.5. Six months later, the trader sells these shares at $60 per share. Ignoring the interest paid on the borrowed amount and the transaction costs, what was the return to the trader during the six-month period?
A. 20 percent.
B. 33.33 percent.
C. 50 percent.
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C is correct The return is 50 percent If the position had been unleveraged the ...View the full answer
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Related Book For
Investments Principles Of Portfolio And Equity Analysis
ISBN: 9780470915806
1st Edition
Authors: Michael McMillan, Jerald E. Pinto, Wendy L. Pirie, Gerhard Van De Venter, Lawrence E. Kochard
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