Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An investor buys 300 shares of stock selling at $66 per share using a margin of 59%. The stock pays annual dividends of $ 1.00

An investor buys 300 shares of stock selling at $66 per share using a margin of 59%. The stock pays annual dividends of $ 1.00 per share. A margin loan can be obtained at an annual interest cost of 4.6%. Determine what return on invested capital the investor will realize if the price of the stock increases to $92 within six months. What is the annualized rate of return on this transaction?

A) If the price of the stock increases to $92 within six months, the six-month return on this transaction is______%. (Round to two decimal places.)

B) The annualized rate of return on this transaction is _____%. (Round to two decimal places.)

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

Financial Markets Of Eastern Europe And The Former Soviet Union

Authors: François Perquel

1st Edition

1855733404,1782420002

More Books

Students also viewed these Finance questions

Question

identify what constitute venture creation by venture capitalists

Answered: 1 week ago