Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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% with an interest rate of 8% on borrowed funds and comissions on the purchase and sale were $75. 1) What is the % earned on the investment if stock is bought for cash (the investor didd not use margin?) 2) what is the % 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

The Handbook For Investment Committee Members

Authors: Russell L. Olson

1st Edition

0471719781, 978-0471719786

More Books

Students also viewed these Finance questions