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An investor buys 100 shares of stock selling at $20 per share using a margin of 50%. The stock pays its annual dividends of $1.00
An investor buys 100 shares of stock selling at $20 per share using a margin of 50%. The stock pays its annual dividends of $1.00 per share in 3 months. A margin loan can be obtained at an annual interest cost of 10.00%. Determine what return on invested capital the investor will realize if the stock price increases to $30 within six months? Show your work for full credit.
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