Question
An investor buys 300 shares of stock selling at $65 per share using a margin of 70%. The stock pays annual dividends of $2.00 per
An investor buys 300 shares of stock selling at $65 per share using a margin of 70%. The stock pays annual dividends of $2.00 per share. A margin loan can be obtained at an annual interest cost of 4.0%.
Determine what return on invested capital the investor will realize if the price of the stock increases to $84 within six months.
What is the annualized rate of return on this transaction?
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Business Analysis And Valuation Using Financial Statements Text And Cases
Authors: Krishna G. Palepu, Paul M. Healy, Victor Lewis Bernard, W.Gordon Filby
2nd Edition
0324015658, 9780324015652
