Question
4. You bought 4000 shares of stock on margin 9 months ago. At that time, you opened your margin account and paid $32.30 a share,
4. You bought 4000 shares of stock on margin 9 months ago. At that time, you opened your margin account and paid $32.30 a share, investing just enough to hit the necessary initial margin requirement of 25%. The remainder of the investment was financed by a broker loan, interest and principal paid when you close your position, and charging 6% EAR. Given that you have just sold your entire position and realized a net annualized return of 30%, what must be the current price of the stock? A) Cannot be computed with the information provided B) $33.70 C) $35.13 D) $35.40 E) $35.79
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started