Question
An investor buys $10,000 worth of a stock priced at $20 per share using 50% initial margin. The broker charges 8% on the margin loan
An investor buys $10,000 worth of a stock priced at $20 per share using 50% initial margin. The broker charges 8% on the margin loan and requires a 35% maintenance margin. The stock pays a $.50-per-share dividend in 1 year, and then the stock is sold at $22 per share. What was the investor's rate of return?
| 17.0% | ||
| 23.83% | ||
| 19.67% | ||
| 25.75% |
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Handbook Of Financial Risk Management
Authors: Thierry Roncalli
1st Edition
1138501875, 978-1138501874
