Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An investor bought on margin 1 0 0 shares of Copier Corp. for $ 8 5 a share. The firm paid an annual dividend of

An investor bought on margin 100 shares of Copier Corp. for $85 a share. The firm paid an annual dividend of $4 a share; the margin requirement was 60 percent with an interest rate of 8 percent on borrowed funds. The price of the stock rose to $120 in one year.Compute the return in percentage earned on the investment if the stock is bought on margin.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Finance

Authors: Scott Besley, Eugene F. Brigham

2nd Edition

003034509X, 9780030345098

More Books

Students also viewed these Finance questions

Question

Will formal performance reviews become obsolete? Why or why not?

Answered: 1 week ago