Question
An investor buys $15 thousand dollars of ABT stock at $20 per share, using 59% initial margin. The broker charges 7% APR compounded daily on
An investor buys $15 thousand dollars of ABT stock at $20 per share, using 59% initial margin. The broker charges 7% APR compounded daily on the loan, and requires a 35% maintenance margin. The stock pays $0.57 per share dividend each year. If the stock is sold at the end of the year at $21 per share, what is the investor's rate of return?
You sell short 200 shares of BSX at $50 per share. You post the 50% margin required for the short sale. Assume you pay 5%interest on the initial value of the loan of shares. The company stock pays dividends of $0.47 per share every quarter. What is your rate of return on this position, if you close it out at $41 per share after one year?
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